Some quick advice for the Blue states: Take the money and run.
Yes, yes, President Bush will continue irritating you on the environment, health care and a thousand other big and small issues. But he did do one very nice thing for the states that preferred Kerry: He made them richer.
And he wants to make them richer still. The enduring theme of Bush tax policy has been to ease the burden on the well-to-do. The big incomes cluster in Blue America: the West Coast, Northeast and upper Great Lakes regions. And that’s where the tax cuts have spread most of their fairy dust.
The talk now is of a flat tax or a national sales tax. Either one would take additional pressure off the income tax. That means the middle class would carry more of the load.
When the tax burden moves down the income scale, it moves away from the Atlantic Ocean and the Pacific Ocean. That Blue-state voters haven’t figured this out is a source of wonderment to people like E.J. McMahon, a senior fellow at the conservative Manhattan Institute.
“The attitude of the Blue states is ‘Take our money, please,’” he said.
Here’s the score: For decades, the federal government has been milking the Blue states and sending their tax dollars to the Red ones – the poor Southern, Plains and Mountain states that vote Republican. Example: For every dollar New Jersey sends to Washington, it gets back only 57 cents in federal spending, according to the Tax Foundation. For every dollar Oklahoma ships out, it receives $1.48 in federal largess.
The argument that rich parts of the country should help the poor ones is a compelling one. But it also ignores the enormously higher costs of living along the coasts. All else being equal, the Feds tax $80,000 incomes the same, whether they are earned in Oklahoma City or Boston. But someone who makes $80,000 in Oklahoma City would need $167,000 to live as well in Beantown.
“In the Blue states, you have a six-figure middle class,” McMahon points out. A breadwinner who brings home $170,000 is not king in his posh New Jersey suburb. “But in the interior, that’s like the bank president.” So there’s a certain social justice in tax cuts that bring per-capita savings of $1,957 to New Jersey but only $842 to Oklahoma.
And what are the Blue states going to do with the money? The possibilities are endless. They can encourage their richest residents to spend their federal tax cuts at home. They can divert some of the savings to state coffers for local projects. New York, New Jersey and Connecticut have all recently raised their state income taxes. The last two openly sold the tax hikes as a mere rerouting of dollars no longer going to Washington, D.C.
California seems poised to profit from both Bush’s tax cuts and his moral disapproval of embryonic-stem-cell research. We speak of California’s vote Tuesday to spend $300 million a year on this promising field. The sum makes a mockery of the measly $25 million Bush doled out last year – and only for work on existing stem-cell lines.
This investment will make California the stem-cell champ of the nation, if not the world. Biotech centers in other regions now fear a brain drain to California. And economists say the program could bring the state a bonanza in jobs and patent royalties worth hundreds of millions.
No one has made a connection between the Bush tax cuts and the research, but someone should. The tax cuts have made California $51 billion richer. So Californians can think of the $3 billion they will spend over the next 10 years as found money.
A more liberal regime in the nation’s capital would have supported embryonic-stem-cell research. It would have vacuumed up tax dollars from rich Blue states like California and spread them around the country. Now, Californians get to spend their money on themselves. And they don’t have to get involved in the abortion politics of other regions.
Opportunity knocks for Blue America. Under the Bush strategy, the Red states get lectures on gay marriage and the Blue states get the money. Blue America, which would you rather have?
Froma Harrop is a Providence Journal columnist. Contact her by writing to fharrop@projo.com.
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