So are Democrats and liberal journalists souring on Social Security and Medicare? Or is it that they’re upset about the progressive nature of the federal income tax?
Check out the responses to Mitch McConnell, who (wrongly, in my view) expressed reluctance about federal coronavirus aid to states on the grounds that many blue states got themselves into fiscal disasters long before the virus. McConnell’s position is wrong, I think. The Democratic response is also dumb.
Here’s Democratic former prosecutor Preet Bharara complaining about this redistribution of wealth:
I too am sick and tired of subsidizing Kentucky
— Preet Bharara (@PreetBharara) April 27, 2020
And here’s the ever-clever Sen. Chris Murphy, a Connecticut Democrat, crapping all over Kentucky WITH DATA!
Kentucky gets $45 BILLION more in federal funding than they pay in taxes.
New York pays $21 BILLION more in taxes than they get from the feds.
So effectively every year NY writes a $21B check to KY.
But helping pay for pandemic response is a blue state bailout.
Got it.
— Chris Murphy (@ChrisMurphyCT) April 27, 2020
But Murphy is being sloppy with his wording in a way that misleads his readers. “New York” does not pay the money Murphy is talking about, nor do New York or Kentucky receive the money from the federal government Murphy suggests they do.
In truth, New Yorkers pay taxes to the federal government, and New Yorkers get money from the federal government. So do Kentuckians. The state governments are basically not at all involved in the payments Murphy is talking about. That makes it a particularly inapt response to McConnell, who is objecting to federal aid directly to state governments.
Similarly, Bharara is not regularly “bailing out Kentucky.” He is paying high income taxes, which are being transferred through the Internal Revenue Service and other federal agencies to the people of Kentucky. So Bharara is really sick of subsidizing the elderly and the poor of Kentucky. Disdain for the elderly and poor of Kentucky, Appalachia, and Middle America was, you may recall, at the heart of Hillary Clinton’s loss in 2016. So this is fitting.
When Florida’s Republican Sen. Rick Scott voiced objections to federal aid to states that, before the coronavirus, fell into poor fiscal shape, the old liberal commentator Joshua Marshall responded with his own data:
Here’s a helpful way to understand Sen Rick Scott’s argument about whether Florida should be “bailing out” New York. Florida gets the second biggest subsidy from the federal government of any state in the country. Every year. pic.twitter.com/Ksekq0ii1D
— Josh Marshall (@joshtpm) April 27, 2020
But again, these numbers don’t show Florida being subsidized. They show Social Security and Medicare at work, as well as income tax.
If Marshall, Murphy, and Bharara don’t understand this, they should imagine a hypothetical. Imagine that someone spent his life working in New York City making a lot of money. Then, he retired and moved to Florida.
Now, imagine that a lot of people did that because (A) New York was a good place to make lots of money, thanks in part to a financial sector propped up by the federal government, and because (B) Florida is a good place to retire.
It turns out, this does happen! It shows up in two numbers:
1.) About 20.3% of Floridians are 65 or older, compared to 16.5% of New Yorkers.
2.) About 20.8% of Floridians earn more than $100,000 a year, compared to 31.2% of New Yorkers.
So New York has two high earners for every retiree, while in Florida, the ratio is 1-1.
The mean federal tax payment from Floridians is $8,590. The mean New York federal tax payment is $12,588. Again, this is because New York has more high-income people.
At the same time, direct payments, mostly Social Security and Medicare, to Floridians average out to $8,734, while such payments to New Yorkers average out to $7,077.
Just this redistribution (federal taxes vs. Social Security, Medicare, and other smaller federal transfer payments to individuals) creates a balance of payments gap between New York and Florida of $5,655 per capita.
On other federal expenditures, the per capita federal spending is about even between those two states. New Yorkers, however, get much more in federal grants per capita than Floridians do — $3,350 to $1,350.
So literally anyone trying to establish New York’s superiority over Florida is really weaponizing a progressive income tax, Social Security, and Medicare. Murphy and others are saying that anybody who benefits from this redistribution system mostly set up by Democrats ought to shut up.
