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No Evidence That Liberals Subsidize Conservatives


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2012 Sep 6, 9:45am   14,143 views  29 comments

by tjjenkins   ➕follow (0)   💰tip   ignore  

Pundits, journalists and posters on this (and many other) forums like to suggest that liberals subsidize conservatives and cite, as evidence, studies that show that so called blue states pay more in taxes than they get back from the federal government, and that the contra is true for red states. This view represents a gross misreading of those studies, at least to the extent the studies are used to suggest that liberals subsidize conservatives.

The studies do not show that blue states pay more in taxes to the feds than they get back - - indeed, since STATES do not pay taxes to the federal government, that would be nonsense. What the studies show is that the combined taxes paid by individuals living in blue states is greater than the amount of tax revenue coming back to that state from the federal government, and that the reverse is true for red states. Now you might think at first blush that I am citing a distinction without a difference but, as explained below, this distinction undermines the core thesis that these studies somehow suggest that liberals subsidize conservatives.

Since it is individuals, and not states, paying the taxes, the real question here is what are the political leanings of the people in the blue states that are responsible for that state's overpayment (i.e., the wealthy residents of that state) - - what is not relevant are the political leanings of the people living in that state generally. Suppose, for example, that a certain state is blue because most of its residents vote democratic, but that the wealthy people living in that state were mostly conservative. Since it is the blue state's wealthy residents that are mostly responsible for its "overpayment" status, the wealth transfer from this blue state to a red state would not demonstrate that liberals were subsidizing conservatives. It would simply show that rich conservatives living in blue states were subsidizing residents of red states.

Is this what is occurring? The data does not answer that question either way, as studies are mixed on whether wealthy people tend to be conservative or liberal. However, to claim that studies regarding the gross tax payments and outlays to red and blue states somehow demonstrates that liberals subsidize conservatives evinces a lack of understanding about the limitations of those studies.

#politics

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7   tjjenkins   2012 Sep 6, 10:43am  

Dan- I guess I just don't see it that way. Here in the bay area, most people are pretty liberal. However, the wealthiest town, Atherton, is also the only city in San Mateo county where a majority of residents are registered republicans. It seems to me that if the most wealthy people in a liberal bastion like the bay area are mostly conservative, then would it be surprising if it were the case that most wealthy people nationally leaned conservative? Basically, if I went to the Atherton of (fill in any US city here) would those people also lean conservative?

8   tjjenkins   2012 Sep 6, 10:54am  

You are right, I don't know. As I stated in my opening post, the available data does not answer the question either way. That is why it is no proper to cite the studies as demonstrating that liberals subsidize conservatives. They might. But these studies do not establish that proposition.

9   Dan8267   2012 Sep 6, 11:02am  

Naturally, the more money people have, the less need they have for social safety nets and government services and the less overall taxation they want for paying for such safety nets and services. However, with the exception of a few very wealthy parasites at the top 1%, most people who make good money never become billionaires that can sit on their asses waiting for royalty checks, dividends, or capital gains.

Most Americans who are well off but still have to work for a living, i.e. the low six-figure income Americans, do invest but don't speculate and they make most of their income from their jobs, not their IRAs, 401Ks, and non-retirement investment accounts. These people are far better served by reducing the federal income tax and increasing the capital gains tax.

Furthermore, these people are almost all college educated, and as the right always complains, colleges are bastions of "liberal indoctrination" what with all that book learning. The six-figure income earner is still quite concerned about things like

1. The outsourcing of high tech, high education jobs.
2. The white collar crimes of bankers that bring down the economy.
3. The consolidation of bargaining power into the hands of a few large corporations.
4. The lowering standards of education and intelligence in America.
5. The intrusion of religion in secular policy making.

Yet Republicans make all these problems worse. Sure, Republicans will pick up the dirt poor religious idiot and the godless uberwealthy tycoon who made his fortune by screwing over others, but they aren't picking up the highly productive worker class American because those Americas are scared shitless about the destruction of the middle class and the upper-middle class techno-artisan class they occupy. Trust me, I'm one of them. Everyone I work with and hang out with is one of them.

My biggest financial fear -- and the biggest financial fear of the income 90-98 percentile I occupy -- is that the middle class is going to be ripped apart by the rich-poor gap and America is going to become a banana republic occupied by a servant class and a ruling class with zero economic mobility. And I see the republicans lusting for that society and doing everything to bring about it.

I don't like the democrats. I hate them. But I hate and fear the republicans more because their polices will kill the middle class, including the upper middle class where I live. Under the republican utopia, no one can make a living producing wealth. You can only make a living by controlling slave labor. How the hell are us real innovators -- not the false innovators of bullshit financial products, but the real innovators of real systems like the Internet -- suppose to make a living in that world?

When the only way to make money is to own everything and the producers of wealth cannot make a living, what the hell happens to the economy? What the hell happens to society?

For every dollar of wealth that I've received in income before taxes, I have generated at least four dollars of wealth for the companies I've worked for. And yet, taking 75% of my wealth creation isn't enough. Nothing less than 100% of my wealth creation is a good enough take for the capitalist. So fuck American producers, let's move all production to third world countries where the workers are slaves in every way but name so we can take 99% of the wealth production.

Why would I vote for a party that thinks this is a good idea? Why would I vote for two candidates who think that capital is more important and more virtuous than production? Why would I vote for a system that considers the employees to be expenses rather than wealth producers?

10   freak80   2012 Sep 6, 1:07pm  

It's pretty simple. Cities tend to be blue and rural areas red. Look at a map of the 2004 election by county and that fact becomes clear. Really there are no "red states" or "blue states"...just rural red counties and urban blue counties.

Obviously rural areas have far fewer people per road mile. Roads are expensive. That accounts for some of the difference. I find it bizarre that "liberal" types are effectively promoting the idea of going back to the days when a few railroad barons controlled the overland movement of goods.

It could be true that red states are "welfare bums" but to prove that, you'd want to look at welfare/SS/medicare spending specifically.

11   bob2356   2012 Sep 6, 9:27pm  

Defense spending has a lot to do with it.

12   freak80   2012 Sep 6, 11:05pm  

freak80 says

Really there are no "red states" or "blue states"...just rural red counties and urban blue counties.

Here's a map that shows this, based on the 2004 election (when the terms "red state" and "blue state" began):

13   freak80   2012 Sep 6, 11:12pm  

Here's one that shows red vs. blue with population. As you can see, most of the big cities are blue.

14   freak80   2012 Sep 6, 11:20pm  

Maybe farm subsidies have something to do with it. Maybe that's why some of the rural counties in eastern Iowa went blue in 2004. I'm all in favor of phasing out corn ethanol subsidies, for example.

15   finehoe   2012 Sep 7, 12:48am  

freak80 says

Maybe farm subsidies have something to do with it. Maybe that's why some of the rural counties in eastern Iowa went blue in 2004.

Usually the ones with their mouths most firmly planted on the government teat (farmers, seniors, defense) are the ones complaining the loudest about "welfare parasites".

16   swebb   2012 Sep 7, 1:30am  

tjjenkins says

Since it is the blue state's wealthy residents that are mostly responsible for its "overpayment" status, the wealth transfer from this blue state to a red state would not demonstrate that liberals were subsidizing conservatives. It would simply show that rich conservatives living in blue states were subsidizing residents of red states.

By that logic wouldn't you expect a red state to have even more rich conservatives and therefore pay more? Or if you are tying to show that the poor conservatives don't use as much federal aid, wouldn't you expect the red states to also take in less?

The problem with this whole discussion is that states "get" money for a variety of reasons, and it's not just to help poor people eat. A rich red state may have stronger lobbying that brings new infrastructure projects to the state, keeps open a military base instead of shuttering it, etc...how do those fit in to the flow of money to the state?

17   freak80   2012 Sep 7, 2:31am  

swebb says

The problem with this whole discussion is that states "get" money for a variety of reasons, and it's not just to help poor people eat.

Exactly. Funds for roads, military bases, dams, and irrigation projects don't go into the personal bank accounts of red-state residents.

That being said, I agree that it's silly to spend money for roads nobody uses. I'm perfectly ok with reducing spending on roads out in the middle of deserts. Of course the plains states still need roads to get cattle and crops to into the cities.

18   curious2   2012 Sep 7, 4:02am  

I'm glad to see this discussion turning to the related question of whether the subsidies actually benefit the recipients. For example, farm subsidies tend to go to ADM and other agribusiness executives and lobbyists, who don't live on farms. Likewise, Medicaid subsidies go to the provider lobbies, not the purported beneficiaries. The prison industrial complex creates many jobs in rural areas, but they're mostly unpleasant jobs, with a deleterious effect on the local community, and prisoner labor undermines local wages. (See The Shawshank Redemption and more recent documentaries on this topic, and of course the history of slavery.)

In general, the biggest recipients of subsidies tend to be the elderly, who tend also to be more conservative, so in that sense there is evidence that younger people (who tend to be more liberal) do in fact subsidize conservatives. A caveat is, if you look at a program like Medicare (where working people subsidize retirees), the real beneficiaries are the revenue recipients, while the purported beneficiaries are too often the victims:

How American Health Care Killed My Father

If people tend to live in job centers while young and working, then retire somewhere else, that would produce a pattern of job centers subsidizing retirement destinations.

19   Shaman   2012 Sep 7, 5:10am  

A possible explanation for the phenomenon of appearing in the charts above is that government invests in energy production. Texas is already developed, but Louisiana combines both developing industries and lots of poor people for a double helping of gub'mint cheese! Alaska is real red, but is also the most underdeveloped state and the government has vested interest in contributing to things like roads and mail service to remote communities. Arkansas has its share of poor people on the Dole, but also has developing industry. West Virginia and the coal connection should be obvious, along with tons of hicks needing welfare for new teeth.
The answers can be found if one searches instead of running around quacking loudly in panic.

20   rooemoore   2012 Sep 7, 5:23am  

Quigley says

If you conduct a study, with the stated objective to prove that up is actually down, then your results don't bear out that conclusion, your problem is that your hypothesis was proven wrong, not the study.
The original poster was finding fault with the analysis of the data. His points are valid, if not as well stated as perhaps they could be.

You are in way over your head on this one.

21   DotsLines   2012 Nov 6, 9:23am  

A couple of people mentioned farm subsidies - and some were less than complimentary with expressions such as 'the biggest mouths at the government teet' and so forth.

I'd like to ask the people expressing such beliefs who they think benefitsa from that "teet"? Go ahead, cut off the farm subsidies, and then when YOU start paying $15 for a loaf of bread or twice as much for ANYTHING made with corn or that eats corn, you'll figure it out. Actually, you're about to get a taste of what that's like, after the droughts of the summer. When it's YOUR wallet shrinking faster than you can feed it just to put food on the table, tell me again how much it's the red states benefiting from the subsidies.

22   Vicente   2012 Nov 6, 10:42am  

DotsLines says

I'd like to ask the people expressing such beliefs who they think benefitsa from that "teet"? Go ahead, cut off the farm subsidies, and then when YOU start paying $15 for a loaf of bread or twice as much for ANYTHING made with corn or that eats corn, you'll figure it out. Actually, you're about to get a taste of what that's like, after the droughts of the summer. When it's YOUR wallet shrinking faster than you can feed it just to put food on the table, tell me again how much it's the red states benefiting from the subsidies.

But I thought the perfection of free markets, plus commodities trading in Chicago, would take care of everything?

23   Bellingham Bill   2012 Nov 6, 10:32pm  

"Go ahead, cut off the farm subsidies, and then when YOU start paying $15 for a loaf of bread or twice as much for ANYTHING made with corn "

Farm subsides are $20B or whatever. $150 per household per year, call it $200.

Corn's not going to go up more than that if we cut the subsidies.

And we're not going to do that, anyway.

24   Dan8267   2012 Nov 7, 1:17am  

tjjenkins says

No Evidence That Liberals Subsidize Conservatives

No evidence that teenage boys are horny little shits.

25   MisdemeanorRebel   2012 Nov 7, 4:37am  

DotsLines says

Go ahead, cut off the farm subsidies, and then when YOU start paying $15 for a loaf of bread or twice as much for ANYTHING made with corn or that eats corn, you'll figure it out.

Was going to respond to this, but Vicente and Bellingham Bill already said it.

Another nice thing about ending corn subsidies --- a return to grass fed beef as marginal farmland that is better used as grazing goes back to grasslands. And the rivers become less polluted because of the end of feedlots, with the manure spread evenly over endless miles of country instead of concentrated in a small space.

Less grains = less obesity, too.

26   MisdemeanorRebel   2012 Nov 7, 4:41am  

Speaking of subsidies and not paying taxes:

The Tax Foundation ain't exactly a left wing group. It was formed by various Big Business interests in response to "evil" FDR's tax schemes, to show how 'Anti-Growth" the New Deal was.

27   Vicente   2012 Nov 7, 6:27am  

thunderlips11 says

nd the rivers become less polluted because of the end of feedlots,

Now I'm thinking about the HORRENDOUS stench of Coalinga! I close all the vents and drive fast when I go through there. Next time maybe I'll bring my SCUBA tank so I don't have to breathe the brown funky haze.

http://weekendamerica.publicradio.org/display/web/2007/12/21/coalinga/

28   MisdemeanorRebel   2012 Nov 7, 11:01am  

Vicente says

http://weekendamerica.publicradio.org/display/web/2007/12/21/coalinga/

Thanks for this, Vicente. This piece has got everything... feedlots, prisons, the guy who wrote the three strikes law... Jeeze.

29   thomaswong.1986   2012 Nov 7, 11:33am  

thunderlips11 says

Speaking of subsidies and not paying taxes:

Domestic Net Migration in the United States: 2000 to 2004

www.census.gov/prod/2006pubs/p25-1135.pdf

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