Your post relied on an analysis of the effect of Federal taxation and spending on the individual states in order to support your argument about the red states collectively, so it's important that the underlying analysis is correct.
Clearly, during the recession, the Federal government has played a dramatically larger role in the economy than it previously did. Since all Federal participation is inefficient-- the costs of managing this participation are substantial, so the benefits are always smaller than the costs-- inevitably the states have lost more money during this time, which increases the incentive to secede.
I don't think you mean that the recession "would just shift everyone down the chart equally". The chart is just an ordered list. But if you mean that the recession, or the resulting increase in Federal spending, has impoverished everyone equally, then I would generally agree, except that "equally" is not right. Some states have been more sensitive than others to the economic disruptions that caused the recession.
Just for the record, I referred to Medicaid, not Medicare. The difference is significant, because Medicaid is a state-managed medical assistance program for the poor of all ages, not a Federally managed insurance program for the elderly. Also, it doesn't help the discussion to insult me, even conditionally. Let's keep this about the facts, not ourselves.
There was a time before Medicaid, so it is not impossible that some red states might simply abolish it, which would likely force those who rely on Medicaid to move to the blue states, thus improving the fiscal health of the red states. Clearly the opportunity to end this kind of state-funded public assistance creates another incentive to secede.
Unfortunately, it's difficult to obtain data that show what portion of state budgets goes toward complying with Federally mandated bookkeeping. I can point to this spreadsheet for the state of Washington:
It shows that the state agencies that deal with social and health spending are by far the largest, and it's reasonable to suppose that overhead from Federal rules compliance is relatively highest for these agencies, but I admit these data are not exactly conclusive.
There are some good estimates of the costs of Federally mandated bookkeeping on the private sector, however, and it seems likely that the overhead for the states is at least somewhat similar.
"U.S. taxpayers pay $431.1 billion annually, or 30 percent of total income taxes collected, just to comply with and administer the U.S. income tax system."
The greatest part of this cost is in lost productivity:
"TheTaxpayer Advocacy Service of the IRS estimates that individuals and businesses also spent 6.1 billion hours complying with the filing requirements of the U.S. income tax code. We estimate the dollar value or cost of these hours to be $377.9 billion as of 2008."
Note that the estimated number of hours comes from the IRS itself; the dollar estimate is from the Laffer Center.
I think it is likely that individuals and businesses are relatively more efficient at complying with Federal bookkeeping requirements than state bureaucracies. All in all, Federal overhead is easily several percent of GDP for the country as a whole and for the individual states.
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timeasmymeasure
no subject
Date: 2012-11-10 08:54 pm (UTC)Clearly, during the recession, the Federal government has played a dramatically larger role in the economy than it previously did. Since all Federal participation is inefficient-- the costs of managing this participation are substantial, so the benefits are always smaller than the costs-- inevitably the states have lost more money during this time, which increases the incentive to secede.
I don't think you mean that the recession "would just shift everyone down the chart equally". The chart is just an ordered list. But if you mean that the recession, or the resulting increase in Federal spending, has impoverished everyone equally, then I would generally agree, except that "equally" is not right. Some states have been more sensitive than others to the economic disruptions that caused the recession.
Just for the record, I referred to Medicaid, not Medicare. The difference is significant, because Medicaid is a state-managed medical assistance program for the poor of all ages, not a Federally managed insurance program for the elderly. Also, it doesn't help the discussion to insult me, even conditionally. Let's keep this about the facts, not ourselves.
There was a time before Medicaid, so it is not impossible that some red states might simply abolish it, which would likely force those who rely on Medicaid to move to the blue states, thus improving the fiscal health of the red states. Clearly the opportunity to end this kind of state-funded public assistance creates another incentive to secede.
Unfortunately, it's difficult to obtain data that show what portion of state budgets goes toward complying with Federally mandated bookkeeping. I can point to this spreadsheet for the state of Washington:
http://www.dop.wa.gov/WorkforceDataAndPlanning/WorkforceDataTrends/Documents/WorkforceHeadcountByAgencyandCounty.xls
It shows that the state agencies that deal with social and health spending are by far the largest, and it's reasonable to suppose that overhead from Federal rules compliance is relatively highest for these agencies, but I admit these data are not exactly conclusive.
There are some good estimates of the costs of Federally mandated bookkeeping on the private sector, however, and it seems likely that the overhead for the states is at least somewhat similar.
According to the Laffer Center:
http://www.laffercenter.com/wp-content/uploads/2011/06/2011-Laffer-TaxCodeComplexity.pdf
"U.S. taxpayers pay $431.1 billion annually, or 30 percent of total income taxes collected, just to comply with and administer the U.S. income tax system."
The greatest part of this cost is in lost productivity:
"TheTaxpayer Advocacy Service of the IRS estimates that individuals and businesses also spent 6.1 billion hours complying with the filing requirements of the U.S. income tax code. We estimate the dollar value or cost of these hours to be $377.9 billion as of 2008."
Note that the estimated number of hours comes from the IRS itself; the dollar estimate is from the Laffer Center.
I think it is likely that individuals and businesses are relatively more efficient at complying with Federal bookkeeping requirements than state bureaucracies. All in all, Federal overhead is easily several percent of GDP for the country as a whole and for the individual states.
(continued)