Where federal taxes are raised and spent | Hacker News Reader

Where federal taxes are raised and spent

economist.com

8 pointsLiveTheDream18 comments

I would guess that Delaware tops the list in paying more than is spent on it just because so many corporations are registered there, so the corporate income tax they pay appears to originate from Delaware. Minnesota in second place surprised me though.

I suspect that's partly due to its proximity to Winnipeg; a great deal of the cross-border traffic with Canada flows through MN. But MN has a disproportionate number of big industrial companies: http://en.wikipedia.org/wiki/Economy_of_Minnesota

Looking at the states, I think corporate headquarters might be a big part of it. Why else would Arkansas be on the list of net givers? (And Minnesota has a relatively many corporate headquarters.)

If you're going to downvote a neutral comment like this, it would help to explain why.

Note, the list is sorted by "sum paid - sum spent as % of gdp".. in the gross, it seems that NY tops it.

Minnesota is where a lot of credit card companies are based from. I believe that there was a Regan-era law(may have been earlier, not sure) that allowed multi-state credit card corporations to basically use their "home state" laws for everyone, rather than the individual state laws. MN, at the time, had very permissive laws for credit card regulation, so a lot of companies relocated to the Twin Cities.

Huh, I always associated that with the Dakotas (eg: http://resources.lawinfo.com/en/Articles/Credit-Card-Gift-Ca...). I can't find anything referring to that happening with Minnesota, and I haven't noticed a particularly large amount of that sort of activity here.

Oh, that's right. It was the Dakotas. Whoops!

This is surprising, do you have a link? Because the Minnesota phenomenon is interesting. I was able to find this:

http://en.wikipedia.org/wiki/List_of_companies_based_in_Minn...

E.g., Norwest Bank (which bought Wells-Fargo), Target, and some others.

It's hard to draw any conclusions from this, apart from everyone's favourite conclusion "This graph totally supports my existing political opinions".

One thing seriously missing: the District of Columbia.

I'm curious how conservatives will find that this supports their existing political opinions. "Red states deserve more of those tax dollars that are evil and shouldn't have been paid?"

Well, if you disaggregate it, the Republican voters in blue states are statistically net tax payers, and Democratic voters in red states who are statistically net tax recipients.

It's a Simpson's paradox type phenomenon, where the aggregation at the state level conceals the individual level trends. Believe the analysis is on the net somewhere, or you can drill down to the Census micro data to confirm it yourself.

Citation needed?

Low-to-middle income whites are the Republican bread and butter in red states. They split college degree whites, lose masters+ whites 3:1 or so, and lose blacks 95:5. But their base in red states are typically not the big-ticket taxpayers, aside from maybe in Texas. (cite, stan greenberg's book from 2004).

FWIW I didn't downmod you.

Both high and low levels of education correlate with voting Democrat. And higher income generally correlates with voting Republican. The tricky part is that higher education also correlates with higher income.

I believe I saw the data disaggregated in a post on Gelman's blog. Will post in an edit if I can find it.

EDIT:

  www.historycentral.com/elections/12008/exit/Income.html [sound]
  http://mapscroll.blogspot.com/2009/03/income-and-2008-us-election.html
  http://www.fivethirtyeight.com/2009/03/rich-and-poor-voters-in-2008.html

The second link is the same as the third link from Gelman's writeup (syndicated by Nate Silver), except the image links in the second link aren't broken.

The data shown indicates that Republicans tend to be on average wealthier than Democrats, until you get to the ultra high income levels. If you think about it, this does start to suggest that there are aggregation issues going on; in general the rich pay more in taxes than the poor, and the middle class and rich tend to vote Republican, so something counterintuitive is going on if "red states" are net tax recipients.

I can't seem to find the original post that did the analysis, but hopefully it seems more plausible now; if you really want to explore the issue you can get into the PUMS sample:

http://www.census.gov/acs/www/data_documentation/data_main

Hm, it's definitely not as clear as I thought, thanks for clearing that up.

I'm typically suspicious of "average" when it comes to income as Bill Gates into a bar makes the patrons much richer on average. But at a glance those seem to be pretty good faith. Dunno why I was so certain, I'll have to dig up that Greenberg book again.

You could spin it as Republican-leaning states support smaller government out of principle even though their short-term self interest favors the status quo.

Agreed, I think this shows where government spending is a primary economic force more than anything else. New Mexico for instance is full of federally-funded labs and nuclear facilities, and has a low population - so per capita government spending looks huge. The tradeoff here is that other, more populous states don't have WIPP in their backyard. Not to mention all the useful environmental factors NM offers (like White Sands).

With so many other factors affecting where overall government spending goes, it would be a mistake to link this to politics at all.

Some of these states (Florida, New Mexico & Arizona I believe) have an odd distribution of money partially due to large retirement communities.

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