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Comment by philwelch | Hacker News Reader

Californians pay more in federal taxes than the state receives in federal spending. This is also true of Oregon, but in California it's true to a much higher degree. So the state is essentially subsidizing the rest of the country and doesn't have enough left over for itself.

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That sounds like the results of progressive taxation and federal welfare. California income is higher than the national average. Mississippi's is lower. So some federal tax dollars from California end up in Mississippi's medicaid fund.

But you can't blame all of California's suck on that. It is not exactly a low-tax state!

Only when you consider that California on the whole is a lot richer than most of the rest of the country.

Mississippi wouldn't be a low tax state if they were unable to tax Californians.

It's not true that those tax dollars are going to Mississippi's general fund. Rather, they are going to things like Medicaid and food stamps. Presumably the federal transfers equalize access to food and medicine across states, so they both start from the same place when they start levying state taxes to provide state services.

Small states can get lots of pork, too. Just look at what Byrd did for West Virginia.

that just sounds like an accounting trick. if Mississipi had higher revenue it could accomodate for more social services without the help of California.

i'm not very familiar with this stuff, but i believe states like California have better social safety nets than states like Mississipi. so different states don't even actually start from the same place

why is that?

The US political system gives disproportionate influence to people living in less populous states.

This would only be the determining factor if you believe that California on its own would not vote for the federal government providing support for the lowest income people.

The evidence seems to indicate that is not the case.

They wouldn't as much as they are forced to now, especially if they were an independent country (which is the only fair comparison).

There's also efficiencies of density that you just don't get in Mississippi, but that also pays off as a redistribution within states from cities to the suburbs and countryside.

Different states have different levels of economic development. Since all states share a common currency, it isn't possible for states like Mississippi to devalue their currency in order to be competitive with California. Large fiscal transfers between states are necessary to keep things balanced out.

Why don't they just sale their goods at lower prices? No need to fiddle with artificial (non-gold-backed) currencies.

A few reasons. Less populous states have proportionally more representation, since representatives are proportional to state population but every state gets two senators. Rural states are earlier in the presidential primary season (Iowa is the first), so they wind up getting more. And the less populous states tend to be poorer in general, so they have less to give and greater welfare need.

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