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PaperclipPerfector  3mo ago (text post)   3830 thread views

Small-Scale Question Sunday for August 18, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

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Alaska has a huge net taker rate.

Louisiana went without federal highway funding for years to have a lower drinking age, although that ended in the nineties. Texas also refuses some federal HHS dollars over something to do with contractor stances on abortion(it boils down to planned parenthood getting the money but the statement in the rule is different).

The real question is 'can states which are net payers on some tax or other stop paying the tax when refusing federal dollars', to which the answer is likely no- Louisiana didn't even try to stop paying the federal gas tax.

The real question is 'can states which are net payers on some tax or other stop paying the tax when refusing federal dollars', to which the answer is likely no

My understanding was that the argument is to keep paying federal taxes while getting nothing back, and figuring out how to make it work through "parallel institutions" and "belt-tightening," though I imagine they were mainly thinking of right-leaning states with better economies than Alaska's.

Texas could, in theory, simply go without federal highway money, given the size of our budget surplus. Giving up federal money en masse would require getting rid of popular services, like CHIPS, unless we figured out a way to wriggle out of federal taxes and collect them ourselves.

The situation is likely similar for states like Utah, Wyoming, Oklahoma, etc.

unless we figured out a way to wriggle out of federal taxes and collect them ourselves.

Again, the idea isn't that the state "wriggles out of federal taxes" — it's that they keep paying them, and then collect the taxes for the now-defunded popular services themselves — your "parallel" system — on top of those taxes. Or else, yes, cut the programs.

So, it seems that you're saying that even for the red states with the best economies, the requisite "belt-tightening" necessary would simply be far more than most anyone is willing to endure (yet). Is that right?

Yes. Texas has the biggest red state economy and is the second wealthiest per capita(behind Wyoming), and is both not a low tax state and dependent on federal block grants to maintain its budget(the federal block grants are less than federal tax receipts from Texas- an independent Texas with the same economy could maintain services with a lower taxation level than current day- but they also make up like 1/3 of the state budget).

Again, states can go without their highway funding or family planning money or other small potatoes for a while if they’re otherwise fiscally healthy. But rejecting all federal funding is a bridge too far; even a strong GOP trifecta with gerrymandering can’t get rid of CHIP and Medicaid and section 8 and food stamps and cut infrastructure spending and etc etc.

While there’s room for taxation to go up in most red states, there isn’t room for tax receipts to rise by a third without massive economic growth.

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