I’ve often heard people around the country say that voters in places like California, New York and New Jersey (which instituted its own ‘millionaires’ tax on those earning $500,000 or more a year several years ago) get what they deserve. But beware. States that have taxed and spent themselves into a bind want everyone else to pay for their excesses. Even as Gov. Paterson excoriated his former colleagues in the state legislature for failing to recognize the magnitude of New York’s budget problems, last week he traveled to Washington, D.C., to urge the federal government to help bail out the state. Paterson argued creatively that the rest of the country should come to his aid because the Empire State is home to the country’s financial markets and thereby contributes disproportionately to the America economy--although I can imagine that there are many states that would gladly take those financial institutions off of New York’s hands if the governor considers them such a burden.
Paterson also contended that states like New York deserve aid because they send more in taxes to the federal government than they receive in return in spending. This is an old argument that one often hears from pols not only in New York, but in New Jersey, California and Massachusetts. Based on an annual ‘balance of payments’ study sponsored by former Sen. Daniel Patrick Moynihan from 1977 through 1999, the study found that certain states were always big losers. But even Moynihan realized that those states were mostly responsible for their own plight, because their federal legislators had led the way in constructing a tax system that not only redistributed income from the rich to others, but also redistributed income regionally.
The article starts by talking about how NY Gov. Paterson learned of several friends who had left the state due to high taxes and burdensome regulation. Now, he is asking the government (ie the citizens of other states) to pay him back for the revenue that was driven from his state.
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