Sometimes you hear discussion of how the red states get more from the government than they pay in taxes while the blue states get less and pay more. This is slightly misleading because the blue states are richer and rich people pay a higher rate of income tax, but it does raise the interesting question of the national effects of the graduated income tax.
For some perspective on where this is coming from, here’s a fun bit from chapter 9 of our book:
In our office is a map from 1924 titled “Good Roads Everywhere” that shows a proposed system of highways spanning the country, “to be built and forever maintained by the United States Government.” The map, made by the National Highways Association, also includes the following explanation for the proposed funding system: “Such a system of National Highways will be paid for out of general taxation. The 9 rich densely populated northeastern States will pay over 50 per cent of the cost. They can afford to, as they will gain the most. Over 40 per cent will be paid for by the great wealthy cities of the Nation. . . . The farming regions of the West, Mississippi Valley, Southwest and South will pay less than 10 per cent of the cost and get 90 per cent of the mileage.” Beyond its quaint slogans (“A paved United States in our day”) and ideas that time has passed by (“Highway airports”), the map gives a sense of the potential for federal taxing and spending to transfer money between states and regions.
I’ll see if I can get someone to take a picture of this amazing map so I can post it on the blog.