Comment by skissane
> Mississippi can’t use social security payments to build infrastructure.
Indirectly, it can, because social security recipients spend the payments they receive, and then some of those payments incur state sales taxes, and contribute to revenue of businesses which pay further state taxes (such as income tax for employees).
And direct federal grants can't always be spent on infrastructure either – you can't use Medicaid funding to build highways.
> Also, programs like Medicaid aren’t as redistributive as you might think.
If you zoom out from individual programs and look at the overall fiscal balance: https://usafacts.org/articles/which-states-contribute-the-mo...
In FY2024, Mississippi residents received (per capita) $11K more in federal spending than they paid in federal taxes; only West Virginia, Alaska and New Mexico received more.
Meanwhile, Texas residents paid $2K more per capita in federal taxes than they received in federal spending; New York residents $4K more per capita; Massachusetts residents $5K more per capita; California, New Jersey and Washington state residents $7K more.
Nebraska got the worst fiscal deal of any US state, with its residents paying $10K more in federal taxes than they received in federal spending
> you zoom out from individual programs and look at the overall fiscal balance
Right, but the overall fiscal balance is driven by the revenue side, not the spending side. More specifically, it’s driven by revenue from the top 50% of households, who pay 90% of all federal income taxes. New York pays more than Mississippi because it has more high income households than Mississippi. You can think of it as a subsidy, but we don’t usually think of it that way. By the same logic, asian american subsidize white americans, and white americans subsidize hispanic americans. We typically wouldn’t say that. The distinction we draw is somewhat arbitrary, but there’s also a logic that richer people benefit more from funding the government even if they get the same amount of services per capita. When the feds spend money on a naval base in Mississippi, who gets a greater benefit from that? Folks working in the base in Mississippi, or the folks working finance in New York whose incomes are tied to the U.S. having the world’s reserve currency?
Putting all that aside, the systems we are talking about in Europe aren’t just progressive taxation. The EU has progressive taxes in a sense—countries fund the EU based on their income levels. But the EU also has transfer programs where poorer countries get direct subsidies to foster economic development. We don’t have anything like that in the U.S.