Red States/Blue States: Taxes and poverty

From Robert Whitcomb's "Digital Diary,'' in

President Trump and congressional Republicans have floated the idea of eliminating the deductibility of state and local taxes on federal personal-income-tax forms. (That would hit upper-middle-class people in southern New England hard.) Not coincidentally this would most affect affluent Blue States, most importantly New York and California, which have high taxes and extensive public services. It’s all part of a much broader plan to slash taxes for Trump and other very rich people, especially those who, like the president, have non-publicly traded companies that take in “pass-through’’ income that goes directly to the owners.

Because evenhuge blue New York and California have GOP congresspeople and they would join their Democratic colleagues in fighting for that deductibility, it seems at the moment that the changewon’t be made.

In any case, the issue reminds me of the gross differences in tax policies between the states. The Red States tend to have lousy public services, high poverty, no or low state income taxes but high sales taxes, which are regressive – they disproportionately hit the middle class and the poor.

Red States tend to disproportionately represent the interest of rich people and big business, who, of course, like most of us, seek to pay as little in taxes as possible. These interests have relatively more power in Red State legislatures and governorships than in Blue States, whose citizens tend to demand stronger state government roles in education, social services, the environment and some other sectors, and thus tolerate higher taxes.

And these better public services pay off: Blue States remain as a group much richer than Red States and with better metrics on health, education, poverty, environment and physical infrastructure, including water and transportation. Indeed, one of the surprises, perhaps, over the last few decades is how the politically powerful (they control the legislative, executive and (mostly) the judicial branches) Red States still lag way behind the Northeast, with its hefty income taxes (except New Hampshire), in so many socio-economic ways.

The fact is that most people are still better off in the Northeast, even as they complain about our taxes.  And the two greatestentrepreneurial, innovation and invention centers in America are Silicon Valley, in high-tax California, the Boston-Cambridge-Route 128 complex in high-tax Massachusetts, and the great wealth creator of very-high-tax, high-public-service New York City.

The worst poverty in America remains in the most Red States, and their tax systems, geared to the personalinterests of plutocrats such as the Koch Brothers, helps explain why.

Of course many well-off retirees will move to Florida from the Northeast for the weather and to avoid income taxes. They no longer need good schools for their children, who have long since grown. Then when get really old, many move back to be taken care of by their children and take advantage of social services, such as mass transit, that are lacking in Florida (which I suppose might be more precisely called a Purple State).