Wednesday, March 26, 2014
States, Federal money, and freedom
Here's an interesting exercise for those who care about personal liberty, constitutional rights and freedoms and privileges, etc.
First, Wallethub has just released a very interesting study titled 'States Most & Least Dependent on the Federal Government'. It examines how much each state contributes (via taxation) to the Federal government, how much it gets back in various subsidies, grants, etc., and calculates how dependent that state is on the central government for its fiscal health and survival. It shows clearly that many states with very low or non-existent personal taxes are more dependent on Federal funds to make up their budgetary shortfall - not necessarily a desirable thing, as it means they're much less capable of resisting pressure from the Feds to take certain actions, even if their people don't want it.
Second, we've looked before at the Mercatus Center's annual ranking of 'Freedom in the 50 States'. I personally rate this a very important assessment of whether or not a state is a good place to live. One reason I was willing to move to Tennessee with my wife was that it was solidly ranked among the top or 'most free' states in the Union.
However, today I decided to compare the degree of freedom of a few states with their financial dependency on the central government. Surprise, surprise! Many of the 'most free' states are also among the most dependent on the Federal government, precisely because their higher level of freedom includes minimal taxation on their residents. To make up for that, they accept greater subsidies from the Feds - and therefore expose themselves to much greater pressure to conform to Federal government policies and politics. Similarly, some of the 'less free' states are actually among the least dependent on the Federal government, because they tax their citizens more heavily, thereby lessening their exposure to financial - and hence political - pressure from the central government.
It's an interesting conundrum. I guess it's yet another example of the old proverb that "You can't have your cake and eat it". Want more freedom? Be more dependent on subsidies. Want greater financial independence? Accept a higher local tax burden, with its concomitant reduction in personal freedom.
What say you, readers? Any thoughts on the matter? Is it better to accept higher local taxation in order to be less exposed to political pressure from Big Brother? Or is it better to keep local taxes to a minimum, which means either cutting back on the role, functions and size of state and local governments, or accepting Federal funding to maintain them?