Why Red States Tend to Be Net Tax Receivers

From Zerohedge:

This is all federal spending, so these totals are a combination of military spending, social welfare programs such as Medicare, and ordinary civilian federal spending, including civilian research facilities and other programs funded by federal grants.

Areas that are more rural and reliant on agriculture will tend to be net tax receiver areas both because farmers and ranchers receive a lot of government subsidies, and also because agricultural work tends to have lower productivity than urban work.

Urban areas, in contrast, produce most of the tax revenue, so highly urbanized states will tend to more often be “break even” or “net tax payer” states.

Additionally, you have retirees in the South and heavy military spending in certain states.

Nationwide, the tax-spending ratio is not one dollar, but it about $1.20. So, states that are getting around $1.20 back for every dollar extracted in taxes are really just at the national average.

On the other hand, the realities of the central bank tend to favor the richer, more urban states at the expense of the poorer tax-receiver states.

Simultaneously, the money creation process tends to favor the financial sectors in large urban areas at the expense of less urban and poorer areas. Thanks to the way the central bank creates money, it is the urban investor classes that get to spend the new money first — before prices adjust to the new, larger money supply — while more rural, less urban, and less productive parts of the country receive this money only after prices have risen. This further perpetuates the tax-spending imbalance.

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