tax spend redistribution johnston

Blue states fund red, poor fund rich - until we predistribute surplus.
wealthiest prosecute wall street

Government redistributes between states and classes - for now.

We excerpt two 2007 articles, one showing redistribution from blue states to red, the other showing redistribution from the middle class to the elite. First, “Most States Pay Less Than They Get” by Stephen Ohlemacher of the Associated Press (Oct 9); second is a review from Corporate Crime Reporter 41 (Oct 16) of Free Lunch, the new book due out in December by David Cay Johnston, the Pulitzer prize-winning New York Times reporter. We end with how to turn redistribution into predistribution.

by Jeffery J. Smith
October, 2007

Ohlemacher: The federal government taxes more than it spends in some states and vice versa in other states. In 2005, Delawareans received 42 cents in federal spending for every tax dollar sent to Washington. Contrasting that, New Mexicans received $3.10 for every tax dollar the state residents sent to Washington.

The geographic distribution of $2.3 trillion in federal government spending includes salaries, grants, military pay, government contracts, and Social Security payments. It excludes interest on the national debt, overseas spending, and the classified budgets of the spy agencies.

Delaware paid the most federal taxes per person, at $15,714. Alaska received the most federal spending per person, at $13,916.

West Virginia paid the least in taxes, at $3,015 per person. The national average was $7,652 per person.

Nevada received the least amount of federal spending per person, at $5,840. The national average was $7,706.

In all, 30 states and the District of Columbia received more money from the federal government than they paid in federal taxes. Wealthy states -- like New Jersey, Connecticut, and Massachusetts -- pay more than poor ones, blue states subsidize red states -- like Mississippi, West Virginia, and Alabama -- and states with powerful politicians on key House and Senate committees fare well in federal spending. The exceptions were the two newest states -- Alaska and Hawaii -- and the two states surrounding the national capital -- Virginia and Maryland; these four high-income states also received high levels of government spending.

CCR 41: What do Brazil, Mexico, Russia and the USA have in common?

A rapidly expanding billionaire class.

Rampant poverty.

And a distressed middle class.

That’s the take of David Cay Johnston in his latest, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill).

Johnston seeks to afflict the comfortable, the 00.1% of Americans -- 300,000 men, women and children -- who last year raked in more money than the bottom 150 million Americans earned.

While Johnston focuses on legal schemes that bloat the richest of the richest at the expense of the rest of us, much of the thievery is the result of pure un-prosecuted or under-prosecuted corporate criminality.

One trick has been to put far too few cops on the beat on Wall Street to even write down all the legitimate complaints, much less pursue more than a handful of evildoers. Johnston writes, “When there is no policeman on the beat the greatest beneficiary is not the taxpayer who is relieved of the cost of maintaining the police officer, but the thief.”

The actions of Ken Lay and Bernie Ebbers and the others were part of a massive shift in practices and policies that continue. “The Wall Street scandals are not over. The conduct they reveled is just becoming institutionalized.”

“Thousands of executives at hundreds of companies took money from shareholders through deliberate actions that distinguish them from bandits only because they wielded pens instead of pistols. The techniques are subtler and less overtly violent, but the results are worse, for they undermine the legitimacy of society in ways that street bandits do not. The rules allow this.”

“These lenders, or their fronts, can now charge rates and impose penalties that were illegal, even criminal, a generation a go,” he says. “The result? In the last 25 years or so, one American family in seven has sought refuge in federal bankruptcy court.”

JJS: What do we do? Forget about taxing income. By then, it’s too late. And forget trying to subsidize; it either goes to insiders with clout or outsiders making a lot of squawk. Instead, don’t let the trillions, the 40%+ of GDP, spent on land, resources, spectrum, and government-granted privileges, collect in a few pockets. Redirect that revenue stream to pay citizens a dividend. Then no matter what state you live in, you’ll to get back more than you pay in -- unless you happen to own a downtown block or oil field.


Jeffery J. Smith runs the Forum on Geonomics.

Also see:

Monopolies Falsely Collect Taxes and Keep Them

Will Congress Continue Pimping for the White House?

Op-Ed on Government Priorities and the Wealth Gap

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