Gavin Newsom threatens to cut off California's federal taxes in Trump rebuke. Yes ,this needs to happiness. Red states talks their nonsense.

[The Barbarian]

California: "See, we're clearly doing it right, because we send more money to the government then we get back -- the fact that <insert red state here> needs more federal money coming is is proof that the liberal way is the right way"

...when that's not the case at all. The uniqueness of the situation that states like California and New York are in (due to historical things that have nothing to do with their current style of governance) have little to do with it.

Stuff like more productive citizens, better climate for businesses, more educational opportunity,

 

[The Barbarian]

No. It's very simple. If there's no law prohibiting you from walking your dog, you're free to walk your dog.

We actually fought a war to decide the question.

 

[Hans Blaster]

We actually fought a war to decide the question.

And if you didn't find Lincoln's law firm of Grant & Sherman convincing there is also the supreme court case:

Texas v. White, 74 U.S. 700 (1868).

which disposed of the notion that states could unilaterally leave. (Oh, look there's our special little hijo, Tejas.)

 

[ThatRobGuy]

Most federal lands were "acquired" through treaties with native peoples and have never been disposed of. Land to build a new federal building in downtown was probably in private hands, but I don't see what land tenure has to do with the silly "balance of payments" argument.

It's because people who use the "balance of payments" argument are often doing so in a way that implies "see, liberal governance is better, NY and California have to pay for all the red states... if the conservative way is so good, why do they need money from California and New York??"

I was simply explaining that a combination
Federal Contract ratios (that pay for services that benefit everyone in the country),
Historical "seating" of certain industries,
and Fortuitous locations

...have more impact on their current status as "donor states" than any their current governance or policies.

 

[The Barbarian]

So just bad luck that the welfare states tend to be red ones?

 

[ThatRobGuy]

Stuff like more productive citizens, better climate for businesses, more educational opportunity,

Not quite...

Best and Worst States For Business

Are you looking to relocate or expand? Evaluate each state's strengths with Chief Executive's annual Best & Worst States for Business ranking.

chiefexecutive.net

The Most (And Least) Business Friendly States

What are the best states for business? Which states are the least business friendly? Read, "The Most (And Least) Business Friendly States" to find out!

www.forbes.com

How Business-Friendly Is Your State? Survey Reveals Best & Worst States For Companies

Thumbtack, a San Francisco-based tech company focusing on business, surveyed about 13,000 business owners for the results.

patch.com

https://www.cnbc.com/2024/07/11/americas-top-states-for-business-full-rankings.html

In the CNBC article, sort the table by the "business friendliness" column at the end and see which ones rank last

Lower taxes and fewer regulations are what makes a state "business friendly", economists from both ends of the spectrum agree on that.


In terms of labor force productivity rates, per the Bureau of Labor Statistics

It's all over the board, while California and Washington state make a good showing for the west coast, it would appear the Carolinas, Indiana, and and Maine put on a strong showing as well.


Education rankings are also all over the board for the various metrics

https://www.usnews.com/news/best-states/rankings/education

Public School Rankings by State 2025

Discover population, economy, health, and more with the most comprehensive global statistics at your fingertips.

worldpopulationreview.com

 

[ThatRobGuy]

I would hope so. The payments leaving California are welfare for less-prosperous (mostly red) states that need those services.

If by that you mean "states that weren't lucky enough to be the seat of the financial sector when it was created", and "states that aren't lucky enough to have been made the seat of the entertainment industry in 1920, and occupy a substantial part of ocean coastline"

 

[ThatRobGuy]

Despite my conservative views, I acknowledge the achievements of California and New York under liberal policies. However, you refuse to give credit where it is due.

These states are successful, not because financial services or Hollywood established their industry 100 years ago. They are successful due to attracting a diverse population of Americans, including the wealthy, educated, and working class. Additionally, they have drawn foreign investors to open businesses within these states.

The actual economic data would suggest otherwise:

The finance and investment sector accounts for approximately 34% of New York’s total economic output

The sector is responsible for about 8% of the city’s tax revenue and 23% of the state’s tax revenue, according to 2018 figures.

One in every nine jobs in NYC is in the financial services industry, and each securities job supports two additional jobs in other sectors, amplifying the sector’s economic influence.

New York by the Numbers Monthly Economic and Fiscal Outlook No. 102 – June 2025

Highlights The U.S. job market was mixed but still fairly solid in May, despite a further decline in Federal Government employment. Unemployment held steady but labor force participation fell. New York City’s April jobs report was mixed: a 6,300 private-sector job gain was largely offset by a...

comptroller.nyc.gov

The NYC financial sector is responsible for a dominant share of the federal taxes paid from New York State, given the sector’s outsize role in generating high incomes and corporate profits.


Reader's Digest Version: "If the seat of the financial sector hadn't changed from Philly to NYC over 100 years ago, the two states would likely be swapped on the Donor vs. Recipient list"



With regards to California:
The entertainment industry generates over $40 billion in economic activity and supports more than 270,000 supporting jobs in the state.

For every $100 million in profits a movie or TV studio nets on a project, $21 million goes to the federal government.

Loading…

assets.kpmg.com

(not to mention all of the famous actors and TV personalities out there paying federal income taxes on their 6, 7, and 8 figure salaries)


With regards to their "fortuitous location", that accounts for a huge amount of revenue as well.

The fact that they occupy such a long piece of coastline, accounts for $1.7 trillion in GDP, accounting for 80% of the state’s total GDP and $662 billion in wages.


Readers digest version, if that wasn't the seat of the nation's entertainment industry, and the country was laid out like this and they didn't occupy a huge amount of coastline:

California would be just another "flyover state" that people didn't care about.

 

[ThatRobGuy]

So just bad luck that the welfare states tend to be red ones?

If California wasn't a coastal state and they weren't the de factor "HQ" of the entertainment sector (two things that have nothing to do with the current form of progressive governance), they'd be the biggest welfare state in the country.

See my reply to the other user right above this one.

There mere location on the map accounts for $1.7 trillion in GDP, accounting for 80% of the state’s total GDP and $662 billion in wages.

Any state that occupies that large of a stretch of "international shipping & entertainment friendly" coastline is going to enjoy built-in economic benefit that no other state can replicate regardless of what style of governance they have.


The things that are "special" about California and New York are the result of industry seating and land deals that were made long before any of the current state leadership was even alive.

 

[ThatRobGuy]

If you really want to know who's actually responsible for the windfalls of revenue that California and NYC have today...here's a cheat sheet

Alexander Hamilton, who founded the Bank of New York in 1784, played a foundational role in establishing New York’s financial infrastructure, combined with Andrew Jackson declining to renew the Second National Bank's charter (that was located in Philly), which drove more power to NYC in conjunction with the expedited completion of the Erie Canal.

Hollywood | History, Movies, Map, Sign, & Facts | Britannica

Hollywood is a district within the city of Los Angeles, California, whose name is synonymous with the American film industry. It was laid out as a real-estate subdivision in 1887 by Harvey Wilcox, and H.J. Whitley, known as the ‘Father of Hollywood,’ later transformed it into a wealthy and...

www.britannica.com

HJ Whitley was instrumental in consolidating the entertainment industry in California.

And their "territorial advantage" is thanks to the members of the California Constitutional Convention of 1849.

Ironic that California's geographical advantage (that accounts for the vast revenues they experience today, that progressives like to hang over the red states' heads) was the result of a series of events that historians refer to as the "California Genocide", as well as the fact that they got to draw their own territory lines on the map due to exploiting the fact that the federal government was deadlocked over the issue of slavery.


Although, maybe I'm wrong... maybe the windfalls of success that NY and Cali are experiencing are due simply to the fact that they teach about condoms in 3rd grade, restrict guns, and require 9 different permits to install solar panels on the roof.

 

[The Barbarian]

In the CNBC article, sort the table by the "business friendliness" column at the end and see which ones rank last

And yet the state is more productive than the "business friendly" states? That seems odd, doesn't it?

Reader's Digest Version: "If the seat of the financial sector hadn't changed from Philly to NYC over 100 years ago, the two states would likely be swapped on the Donor vs. Recipient list"

"If red states had a more educated workforce, they would be as productive as blue states." This is true, but none of these things happen by magic. Culture and policy drive most of it.

 

[ThatRobGuy]

And yet the state is more productive than the "business friendly" states? That seems odd, doesn't it?

They're two totally different metrics... California is more productive than Alabama...yet, South Carolina is more productive than Oregon, Illinois, and NY.

I thought we were having an honest conversation about the various metrics?

Nothing to say about the other metrics where California is lagging behind?

"If red states had a more educated workforce, they would be as productive as blue states." This is true, but none of these things happen by magic. Culture and policy drive most of it.

Seems as if you're injecting things in that weren't demonstrated by the data.

I provided links showing where California and New York far from the "top of the pile" in the realm of education.

"Spending a lot of money on it" doesn't equate to quality.

In the one link I provided, Cali was #37 in education, and #32 in the other one.




So to recap

While California puts up a respectable number in terms of worker productivity, so do red states (so that's not unique to them)

Across a variety of sources from across the political spectrum, Cali is in the bottom 5 in terms of "business friendly"

Both a right leaning and left leaning source place them in the bottom half in terms of education.


The thing that makes California "special" (in terms of them sending more federal tax money in than they get back) isn't their liberal culture and governance, it's the fact that they're home to the "rich & famous" paying huge income taxes, and the fact that 150 years ago, a bunch of shrewd people (after slaughtering 100,000 indigenous peoples to get them out of the way), capitalized on a national slavery debate to get the opportunity to carve out a huge piece of coastline for themselves.

If California was located in the middle of the country instead of the coast, with the same people and same policies, they'd be the countries biggest flyover state. (and one that people would avoid)

There's nothing "special" about Cali in terms of their actual policies, unless one has the goal of clinching that #1 spot on the "most CVS locations that have to lock up their shampoo behind glass" list.


See...people have a bad habit of conflating "historical value", "ecological climate", and "geography" for "these policymakers must be doing something right" with regards to NY and Cali.


"People want to come visit here and businesses want to have presence here, that must mean we're doing something right"...no...

Like I said, if Cali were here:

And it wasn't easy access for international shipping ports, didn't have ocean front beaches, and got crummy weather like the other midwestern states, there would be nothing special about it.

One would actually have to try really hard to make bad policy on purpose if they wanted to make California a "non-profitable" state.



Saying that California is a profitable state because of their current policies would be like saying that Paris Hilton is successful due to her business acumen.

 

[FAITH-IN-HIM]

The actual economic data would suggest otherwise:

The finance and investment sector accounts for approximately 34% of New York’s total economic output

The sector is responsible for about 8% of the city’s tax revenue and 23% of the state’s tax revenue, according to 2018 figures.

One in every nine jobs in NYC is in the financial services industry, and each securities job supports two additional jobs in other sectors, amplifying the sector’s economic influence.

New York by the Numbers Monthly Economic and Fiscal Outlook No. 102 – June 2025

Highlights The U.S. job market was mixed but still fairly solid in May, despite a further decline in Federal Government employment. Unemployment held steady but labor force participation fell. New York City’s April jobs report was mixed: a 6,300 private-sector job gain was largely offset by a...

comptroller.nyc.gov

The NYC financial sector is responsible for a dominant share of the federal taxes paid from New York State, given the sector’s outsize role in generating high incomes and corporate profits.


Reader's Digest Version: "If the seat of the financial sector hadn't changed from Philly to NYC over 100 years ago, the two states would likely be swapped on the Donor vs. Recipient list"



With regards to California:
The entertainment industry generates over $40 billion in economic activity and supports more than 270,000 supporting jobs in the state.

For every $100 million in profits a movie or TV studio nets on a project, $21 million goes to the federal government.

Loading…

assets.kpmg.com

(not to mention all of the famous actors and TV personalities out there paying federal income taxes on their 6, 7, and 8 figure salaries)


With regards to their "fortuitous location", that accounts for a huge amount of revenue as well.

The fact that they occupy such a long piece of coastline, accounts for $1.7 trillion in GDP, accounting for 80% of the state’s total GDP and $662 billion in wages.


Readers digest version, if that wasn't the seat of the nation's entertainment industry, and the country was laid out like this and they didn't occupy a huge amount of coastline:
View attachment 366413

California would be just another "flyover state" that people didn't care about.

No matter how you slice & dice it, California is not a "flyover state" but stands as the 4th largest economy in the world.

 

[FAITH-IN-HIM]

If California wasn't a coastal state and they weren't the de factor "HQ" of the entertainment sector (two things that have nothing to do with the current form of progressive governance), they'd be the biggest welfare state in the country.

See my reply to the other user right above this one.

There mere location on the map accounts for $1.7 trillion in GDP, accounting for 80% of the state’s total GDP and $662 billion in wages.

Any state that occupies that large of a stretch of "international shipping & entertainment friendly" coastline is going to enjoy built-in economic benefit that no other state can replicate regardless of what style of governance they have.


The things that are "special" about California and New York are the result of industry seating and land deals that were made long before any of the current state leadership was even alive.

No one can deny that the success of California and New York City built upon a history spanning 150 years of various leaderships. It is a mistake to attribute all these successes solely to either liberal or conservative policies. American success and exceptionalism result from the combined contributions of both liberal and conservative ideologies working together. Neither liberals nor conservatives can claim sole credit for the success of California or New York City. This illustrates that there is no monopoly on what ideology made America successful; both ideologies have played a crucial role in making America great.

It is sad that both sides deny facts and claim sole credit for making America great. You fail to recognize that California and New York City are unparalleled due to political differences with their leadership.

Before we engage in a debate on these complex issues, it is essential to acknowledge that California and New York are both distinguished and prosperous states. Their successes are built upon contributions from both liberal and conservative ideologies.

 

[ThatRobGuy]

No matter how you slice & dice it, California is not a "flyover state" but stands as the 4th largest economy in the world.

But they would be if they were in the middle.

You take away the $1.7 trillion in GDP (and the $600B+ in wages that generates) that can not exist if without their state occupying 800 miles of Pacific Coastline), they would absolutely be a "flyover state".


A terrible governor in California is still going to have a more "successful state" (in terms of the donor vs. recipient dynamic) than even the best Midwestern governor.

Example:

Remember Gray Davis? Widely regarded to be one of Cali's worst governors (he was the one that was recalled and replaced by Arnold)

Under his tenure:
California received $0.81 in federal spending for every $1.00 it sent to Washington in federal taxes

And he got to be the guy lucky enough to be there during the "tech boom" which produced large GDP. Clearly the residents weren't terribly pleased with him if they recalled him.


Contrast that against Mitch Daniels (considered to be one of the better governors that they had for the midwest region)
On his reelection campaign, he was so popular after his first term, he received more votes than any other public office holder in the State's history. Was even nominated for awards by Democratic governors in the National Governors Association.

He left the state with a balanced budget, a cash surplus, and made several major infrastructure upgrades, and implementing a healthcare imitative that was fairly popular, where a person whose employer didn't provide coverage, could get coverage for 2% of their gross income (meaning, if a person making 50k didn't have healthcare, they could get it for 85/month) which was funded by his increase on cigarette tax.

He was even popular enough that he got 31% of the Black vote, and 49% of the Latino vote (which is somewhat impressive for a Republican in the 2000s)

Even with that track record, Indiana was still a "recipient state", receiving $1.09 for every $1.00 they sent to Washington.


Now, imagine what Daniels could've done if he had 800 miles of pacific coastline, nice weather (and all of the built-in industries that come with those attributes)... or if Indiana had been the long established seat of the US financial sector for a century (and an economic powerhouse sector that you know isn't going to relocate no matter who the governor is)

 

[FAITH-IN-HIM]

But they would be if they were in the middle.

You take away the $1.7 trillion in GDP (and the $600B+ in wages that generates) that can not exist if without their state occupying 800 miles of Pacific Coastline), they would absolutely be a "flyover state".


A terrible governor in California is still going to have a more "successful state" (in terms of the donor vs. recipient dynamic) than even the best Midwestern governor.

Example:

Remember Gray Davis? Widely regarded to be one of Cali's worst governors (he was the one that was recalled and replaced by Arnold)

Under his tenure:
California received $0.81 in federal spending for every $1.00 it sent to Washington in federal taxes

And he got to be the guy lucky enough to be there during the "tech boom" which produced large GDP. Clearly the residents weren't terribly pleased with him if they recalled him.


Contrast that against Mitch Daniels (considered to be one of the better governors that they had for the midwest region)
On his reelection campaign, he was so popular after his first term, he received more votes than any other public office holder in the State's history. Was even nominated for awards by Democratic governors in the National Governors Association.

He left the state with a balanced budget, a cash surplus, and made several major infrastructure upgrades, and implementing a healthcare imitative that was fairly popular, where a person whose employer didn't provide coverage, could get coverage for 2% of their gross income (meaning, if a person making 50k didn't have healthcare, they could get it for 85/month) which was funded by his increase on cigarette tax.

He was even popular enough that he got 31% of the Black vote, and 49% of the Latino vote (which is somewhat impressive for a Republican in the 2000s)

Even with that track record, Indiana was still a "recipient state", receiving $1.09 for every $1.00 they sent to Washington.


Now, imagine what Daniels could've done if he had 800 miles of pacific coastline, nice weather (and all of the built-in industries that come with those attributes)... or if Indiana had been the long established seat of the US financial sector for a century (and an economic powerhouse sector that you know isn't going to relocate no matter who the governor is)

Your argument relies “IF”, “Could-have”, ‘Should-Have”, possibilities, and hypothetical scenarios. Ultimately, it is a simple fact that California is one of the most successful states in the USA.

 

[ThatRobGuy]

Your argument relies “IF”, “Could-have”, ‘Should-Have”, possibilities, and hypothetical scenarios. Ultimately, it is a simple fact that California is one of the most successful states in the USA.

Yes, because of things that have nothing to do with being "progressive" or "conservative".

California would still be a donor state with a massive GPD even if you or I were the governor there despite us not having any political experience.

If you have that much ocean coastline, and are fortunate enough to have good weather, you have enough "inherited benefits" that you'd have to actually try to sabotage it on purpose to make it not be successful.


The main point wasn't to disparage a particular governor, but rather to refute the implied notion that many progressives convey, which is that everyone else should be doing things "the California/New York way" (using their financial status as the rationale) by claiming that their status as a "donor state" means "we're doing things so right, and the red states are doing thing so wrong, that we have to bail them out".

 

[FAITH-IN-HIM]

Yes, because of things that have nothing to do with being "progressive" or "conservative".

California would still be a donor state with a massive GPD even if you or I were the governor there despite us not having any political experience.

If you have that much ocean coastline, and are fortunate enough to have good weather, you have enough "inherited benefits" that you'd have to actually try to sabotage it on purpose to make it not be successful.


The main point wasn't to disparage a particular governor, but rather to refute the implied notion that many progressives convey, which is that everyone else should be doing things "the California/New York way" (using their financial status as the rationale) by claiming that their status as a "donor state" means "we're doing things so right, and the red states are doing thing so wrong, that we have to bail them out".

Your argument is that California and New York's location, history, and resources have contributed to their success. Consequently, they are donor states. Conversely, other states that receive funds from donor states could also achieve success if they had similar population sizes, natural resources, or historical circumstances that favored financial growth in those states 100 years ago.

Fair enough.

No one expects Mississippi or Alabama to have the same GDP as California or New York. However, my question is why, despite being part of the greatest and wealthiest country in the world, states like Mississippi or Alabama can't attract multi-billion dollar corporations like Facebook or Microsoft? Why do graduates from these states leave to go to California or New York City? Why doesn't the local economy flourish in these states so they can rely on their own revenue?

 

[ThatRobGuy]

Your argument relies “IF”, “Could-have”, ‘Should-Have”, possibilities, and hypothetical scenarios.

Interestingly enough, do you recall back in 2021 when there was chatter about moving stock exchanges from NYC to Miami?

I don't know that it was ever a super-serious plan, but nevertheless, the Miami mayor was trying their best to court huge financial firms.

Economists writing for the NY Times and Brookings urban policy analysts did actually weight in on that hypothetical and what the results would be.


If even 1 of the 2 exchanges moved, it would be disastrous. (The New York Budges office noted that even 5–10% shrinkage in the financial sector (via losing firms to other states) would cause major shortfalls in budgets at both the city and state level.)

Just one exchange moving would cost New York 30% of it's economic output, and 20% of it's personal income tax revenue.

They also noted that a significant portion of the high-earners in the financial sector leaving would be a crippling blow to other sectors (high-end retail, consulting firms, and law firms -- most of which in that city are anchored by the presence of the stock exchanges being there)

If both exchanges moved, NYC would resemble the situation that happened to Detroit after their major anchoring industry bled out.

 

[FAITH-IN-HIM]

Interestingly enough, do you recall back in 2021 when there was chatter about moving stock exchanges from NYC to Miami?

I don't know that it was ever a super-serious plan, but nevertheless, the Miami mayor was trying their best to court huge financial firms.

Economists writing for the NY Times and Brookings urban policy analysts did actually weight in on that hypothetical and what the results would be.


If even 1 of the 2 exchanges moved, it would be disastrous. (The New York Budges office noted that even 5–10% shrinkage in the financial sector (via losing firms to other states) would cause major shortfalls in budgets at both the city and state level.)

Just one exchange moving would cost New York 30% of it's economic output, and 20% of it's personal income tax revenue.

They also noted that a significant portion of the high-earners in the financial sector leaving would be a crippling blow to other sectors (high-end retail, consulting firms, and law firms -- most of which in that city are anchored by the presence of the stock exchanges being there)

If both exchanges moved, NYC would resemble the situation that happened to Detroit after their major anchoring industry bled out.

You are focusing on If the financial sector leaves NYC, the city will face economic challenges. I agree.

My question is, if New York City or California are perceived as problematic or their local governments are considered ineffective, why are financial sectors not moving to different states? Why hasn't the stock exchange relocated to Miami? If life is so favorable in Alabama, why hasn't Bank of America moved its headquarters there? Similarly, if Oklahoma is such an ideal place, why haven't major companies like Facebook or Microsoft moving to those location?