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Post Tax Revenues vs GDP Loss in Catalonia
Created by John Eipper on 09/25/14 9:54 AM

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Tax Revenues vs GDP Loss in Catalonia (Henry Levin, USA, 09/25/14 9:54 am)

There is something wrong with Jordi Molins's characterization (24 September) of differences in tax revenues versus loss of GDP in Catalonia. He says that Catalonia pays 19.73% of the total tax revenues in Spain but receives only 11.17% of government spending. This is a comparison of tax revenues, not GDP. But in the next sentence he tells us that this difference is 8.56% of GDP. This cannot be unless 100% of GDP is devoted to taxes. It is also important to point out whether the figures refer to national taxes and spending, or all taxes, since regional and local taxes are also part of the Spanish system of taxation. (I pay them, so I know.)

But, there is also a philosophical issue that must be addressed. In the US, rich states like New York pay much more in federal taxes per capita than poor states like Mississippi. We are one nation, a federalism, and accept that the application of a common system of federal laws on taxation and spending will mean that there will transfers from rich states to poor states to give the same protections of their citizens. Additionally, some states have more federal installations than others for military purposes or national parks or other public works, and these require a redistribution of federal tax resources among states. This is widely accepted. I may disagree with our farm subsidies, but their distribution to farm states is not controversial. Many Catalans seem to believe that in a national entity, each region should get in payments from the national government only what it pays into it. That criterion seems to be one that assumes that regional differences in need or distribution of national obligations do not exist.

I am not arguing that the Spanish system of taxation is fair or rational or free of corruption. However, differences between the proportion of taxes from a region and what is returned to it in spending is not prima facie evidence of unfairness.

JE comments:  Wikipedia has a table on the ratio by state of federal revenues vs federal spending.  Some of the "donor" states are surprising, like Nebraska.  Others not so much:  corporate tax haven Delaware gives the highest percentage of its payments to other states.  Which state benefits the most?  In terms of percentage, South Carolina, but in total dollar outlays, it's Florida.  (And why is shale-rich North Dakota #2 on the receiving end?  Farm subsidies?)  The rankings suggest no significant "red state/blue state" divide:

http://en.wikipedia.org/wiki/Federal_taxation_and_spending_by_state



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  • Tax Revenues vs GDP by US State; from Ric Mauricio (John Eipper, USA 09/26/14 1:24 AM)
    Ric Mauricio sends this response to Henry Levin (25 September):

    "It is more blessed to give than to receive," Jesus taught in Acts 20:35. The discussion of taxes paid vs. government benefits received had me scratching my head. Seems that the issue being put forth is that receiving less benefits than taxes paid was negative. But thinking in economic terms, I would say that receiving lower government benefits than paying taxes shows more of a positive economic environment. In the Spanish case, it is saying that Catalonians are economically contributing more than their share into the Spanish economy.


    Looking at the US (per John's Wikipedia link), for example, one can see that the statistics support this view. The states that have the lowest ratios, from Delaware and Nebraska to South Dakota and Texas, are the most prosperous states, while those with the highest ratios may have stagnating economies. Makes sense, if your economy is not operating well, the companies domiciled within the state will have less tax revenues to submit, while citizens in that state may have an increased dependence on government programs.


    So again, back to Catalonia, it has a 56% benefit/revenue paid, which would rank it alongside Wyoming and New York.


    JE comments:  It would be useful to run a correlation between the revenue/benefit ratio and per capita GDP.  From looking at yesterday's chart (http://en.wikipedia.org/wiki/Federal_taxation_and_spending_by_state ), some of the biggest recipient states are not "obviously" poor (Florida, North Dakota), and some of the donor states not obviously rich (Ohio, Arkansas...Walmart?).

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    • "It is More Blessed to Give than to Receive": Did Christ Ever Say This? (David Duggan, USA 09/26/14 11:54 AM)
      The quote Ric Mauricio (26 September) attributed to Jesus, "it is more blessed to give than to receive" from Acts 20:35 brought me up short.  By this time in Acts, Jesus has long departed this terrestrial orb (see Acts 1:9, where He was taken up in a cloud), and the last half of Acts is devoted to Paul's travels and trials.

      So I went to the text, and found that it was Paul citing Jesus to the Jewish elders in Ephesus, admonishing them to help the weak (Ephesus was a trading city and presumably the traders had about as much interest in helping the weak as I have). Hmm. Virtually every week in church for the last 60 years I have heard this admonition as the minister solicits our donations ("Remember the words of our Lord Jesus Christ: 'It is more blessed to give than to receive'"), and it is really Paul quoting Jesus. Since Paul never met Jesus in the flesh, I am thinking, how lame is this. So I went back to the Gospels, and nowhere can that statement be found. In the beatitudes and Sermon on the Mount (Luke 6, Matthew 5), there are statements that come close to that ("Blessed are the poor ..."), but nothing that nails it.


      Since by common understanding Luke wrote Acts, one might wonder why the blessed physician did not include that statement in his gospel. Some commentators have suggested that the omission is a testament to St. John's final statement: "Jesus did many other things as well. If every one of them were written down, I suppose that even the whole world would not have room for the books that would be written." (John 21:35 and see also John 20:30). Hmm. John's gospel was written maybe 20 years after Acts. How could Luke write something that was confirming a proposition not yet in existence? I guess it is one of faith's little mysteries.


      JE comments: Was Luke just speculating on what Christ should have said, to try to keep the faithful on the virtuous path?  Altruism, after all, is one of the most socially useful behavior traits.  And it's not innate.


      By the by, Beloved WAISers:  Some of you have made pledges to your favorite website but have not yet followed through.  PayPal at donate@waisworld.org


      Bless you.


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