Why Does the Federal Government Shift So Much Wealth from Blue States to Red States?

http://www.iSteve.com/05JanC.htm#red.blue.taxes

An overlooked reason is the progressive income tax. Blue states are much more crowded than red states, and thus have higher land prices (see item above on Southern California housing costs) and higher overall costs of living. In turn, their residents have higher incomes. The progressive tax rates mean the higher paid blue staters have to pay more of their income in taxes, although it's not clear they can afford that better than lower-cost-of-living red staters.

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