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> Doesn’t that support my point that the higher tax states actually subsidize poorer states? No, it doesn't, because your statement presupposes that Social Sec
by bhupy 6y ago
> Doesn’t that support my point that the higher tax states actually subsidize poorer states?
No, it doesn't, because your statement presupposes that Social Security payments disproportionately go to the poor. In practice, Social Security (and Medicare) represent welfare for the rich. Baby Boomers are the wealthiest cohort in the US[1][2]. (FTA) "For two-thirds of seniors, Social Security has detached from the program’s original mission — to eradicate senior poverty — and is now the world’s most expensive upgrade from Carnival to Royal Caribbean for Nana and PopPop."
While there are poor retirees that benefit from SS/Medicare, they represent the minority of their cohort. On average, retirees are among the richest people in the country owing to a lifetime of accrued earnings (unlike, say, college graduates). So programs like SS/Medicare that target retirees are about the furthest thing from "subsidizing the poor". Consider that Bill Gates, Ariana Huffington, and Warren Buffett all qualify for Medicare and receive SS checks.
SS/Medicare also represent about half of the Federal budget. This is exactly why you need to adjust for those programs, because when you say that the Federal budget overwhelmingly subsidizes "poor low tax States", half of that just goes to old people, who overwhelmingly live in Red, 0-tax states like Florida. It tells us nothing about the fiscal health of those states, nor their dependence on the Federal government. On the other hand, high tax blue states disproportionately suffer from poor fiscal health, owing to under-funded defined benefit pensions that are essentially insolvent.
> But, the entire point of my post was arguing against the idea that states with high taxes and limiting SALT was unfair to states that pay less in taxes.
But once you account for SS/Medicare, the distribution of net-contributors and net-takers does not cleanly correlate with high vs low state and local taxes. This means that it's an extremely inefficient way of handling the inequity. You think it's a problem that some states pay more than they take in? Then address that directly! Don't use state-and-local-taxes as a proxy for that. It's an extremely messy and ham-fisted way of solving that problem.
[1] https://www.bloomberg.com/news/articles/2016-07-12/the-richest-generation-in-u-s-history-just-keeps-getting-richer https://www.bloomberg.com/news/articles/2016-07-12/the-riche...
[2] https://marker.medium.com/lessons-from-iowa-and-the-fallibility-of-tech-bc10e9b7464f https://marker.medium.com/lessons-from-iowa-and-the-fallibil...