California and Kentucky

Could we compare California’s relationship with Kentucky to Germany and Greece?

Somewhat like Germany and Greece…

• California and Kentucky share the same currency.
• California has a more vibrant economy than Kentucky’s.
• Workers in California earn more than workers in Kentucky.

And yet, even though they are more productive and more affluent, California residents do not complain that a higher proportion of Kentucky’s residents receive Medicare and Medicaid funds. 

Could we say that we in the US comfortably support “have” states’ taxes going to the “have-not” states while German citizens resist similar support for Greece? The parallel is inexact but it is interesting to contemplate.

The Economic Lesson

Now, as we try to diminish our deficit, the issue of redistribution resurfaces. Taking money from one group and using it for another, taxation redistributes income. Also though, by spending less, we are making a statement about redistribution.

An Economic Question: Specifically noting “from” and “to,” how might different kinds of taxes redistribute income?

The idea for today’s post came from this blog. Please do note that contrary to what that blog implies, California has a higher unemployment rate than Kentucky.