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I recall that state and local taxes can be deducted from federal taxes. I think a fair case can be made that this should be counted as a federal subsidy / expenditure. This subsidy is likely higher in blue states due to higher overall taxes. Unsure about the size of this effect, but from the discussions about AMT I guess it is significant.

Such a "subsidy" is already accounted-for in the above graph. Formula is (fed_aid_recvd/fed_taxes_paid - 1). The state tax deduction reduces "fed_taxes_paid" term. Mortgage deductions have the same effect, as do deductions charitable contributions, child tax credits, etc.

What's the argument that these should be considered part of "fed_aid_recvd"?

Hmm, wish I had more time to play with this, but my first impression, aside from tax progressivity, is about population density -- densely-populated states are net payers; sparsely populated states are net gainers, as a general tendency.

Kevin, I did it real quick -- Wife's shoving me out the door. Took census info (latest) for pop ranking, compared to redist ranking. Average absolute difference between ranks is about 12.

Posted a pic here:
http://img157.imageshack.us/img157/529/popvsrdistranknr4.png

Pseudo,

Your comparison is okay, but it measures _absolute_ population, not population density. Here is the comparison between net tax loss and population density (density rankings courtesy of Wikipedia):

Density Rank State Tax Loss Rank
1 New Jersey 1
2 Rhode Island 18
3 Massachusetts 11
4 Connecticut 3
5 Maryland 33
6 New York 9
7 Delaware 7
8 Florida 17
9 Ohio 20
10 Pennsylvania 23
11 Illinois 6
12 California 8
13 Hawaii 39
14 Virginia 41
15 Michigan 14
16 Indiana 21
17 North Carolina 24
18 Georgia 19
19 Tennessee 32
20 New Hampshire 4
21 South Carolina 35
22 Louisiana 47
23 Kentucky 42
24 Wisconsin 12
25 Washington 13
26 Alabama 44
27 Missouri 34
28 Texas 16
29 West Virginia 46
30 Vermont 25
31 Minnesota 5
32 Mississippi 49
33 Iowa 27
34 Arkansas 37
35 Oklahoma 36
36 Arizona 30
37 Colorado 10
38 Maine 38
39 Oregon 15
40 Kansas 29
41 Utah 22
42 Nebraska 26
43 Nevada 2
44 Idaho 31
45 New Mexico 50
46 South Dakota 43
47 North Dakota 45
48 Montana 40
49 Wyoming 28
50 Alaska 48

Well, that was kind of a waste. Different numbers, same result. The average difference is just under 12.

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