Mound City

Just when I start saying good things about the National Review, Ramesh Ponnuru has to write something like this on their blog.

TAX REFORM [Ramesh Ponnuru]
I'd been hearing, even before the election, that the administration was looking at getting rid of the deduction for state and local taxes as part of its tax-reform package. I'm all for the policy: Why should low-tax states subsidize high-tax ones? Why should the federal government encourage states to have high taxes? But didn't tax reformers get their heads handed to them over this precise issue in 1985-86? Of course, there were more New York Republicans then to worry about.

The administration is also apparently looking at taxing employer-provided health insurance. Again, a good policy: that tax break has done a lot of damage to health-care markets over the years. And anyone who wants to get rid of the alternative minimum tax without swelling the deficit has to look at taxing health insurance: It's one of the few tax breaks that can generate the necessary funds. But again, there are obvious political risks here.
Posted at 11:40 AM

As to the first point of who subsidizes who, there seems to be plenty of evidence that in general the Blue States receive less money from the Federal Government than they give, while the Red States tend to receive more than they give. TaxProfBlog gives a good rundown of the Tax Foundation's report on this subject.

The report shows that of the 32 states (and the District of Columbia) that are "winners" -- receiving more in federal spending than they pay in federal taxes -- 76% are Red States that voted for George Bush in 2000. Indeed, 17 of the 20 (85%) states receiving the most federal spending per dollar of federal taxes paid are Red States. Here are the Top 10 states that feed at the federal trough (with Red States highlighted in bold):
States Receiving Most in Federal Spending Per Dollar of Federal Taxes Paid:
1. D.C. ($6.17)
2. North Dakota ($2.03)
3. New Mexico ($1.89)
4. Mississippi ($1.84)
5. Alaska ($1.82)
6. West Virginia ($1.74)
7. Montana ($1.64)
8. Alabama ($1.61)
9. South Dakota ($1.59)
10. Arkansas ($1.53)

In contrast, of the 16 states that are "losers" -- receiving less in federal spending than they pay in federal taxes -- 69% are Blue States that voted for Al Gore in 2000. Indeed, 11 of the 14 (79%) of the states receiving the least federal spending per dollar of federal taxes paid are Blue States. Here are the Top 10 states that supply feed for the federal trough (with Blue States highlighted in bold):
States Receiving Least in Federal Spending Per Dollar of Federal Taxes Paid:
1. New Jersey ($0.62)
2. Connecticut ($0.64)
3. New Hampshire ($0.68)
4. Nevada ($0.73)
5. Illinois ($0.77)
6. Minnesota ($0.77)
7. Colorado ($0.79)
8. Massachusetts ($0.79)
9. California ($0.81)
10. New York ($0.81)

As for his assertion that the employer health care tax break is screwing up the market, I can't make much of that. However, I can tell you, if that goes, so does millions of workers' health care.