Blue States’ Whining About “Subsidizing” Red States Is Nonsense

In a September 19 article in The Wall Street Journal titled “Newsom Falls for the ‘Red Moocher State’ Myth,” Steven Malanga highlights how Gavin Newsom boasts that California is so successful, it subsidizes red states by sending more to Washington in federal taxes than it gets back in spending. It’s a popular blue-state talking point—but it falls apart under scrutiny. For one, it often blurs the line between state and federal taxes. California’s sky-high state taxes are irrelevant to this conversation. What matters is the balance of federal taxes paid versus federal dollars received, and when you isolate those figures, the idea that red states are mooching while blue states foot the bill is myth not reality.

When you calculate how much money you send to Washington from federal taxes, that’s easy to figure out. It’s just a function of how many federal taxes are coming from residents and businesses of the various states. When examining how much money flows back from Washington to the states, it’s important to distinguish between two entirely different types of federal spending. The first type—redistributive spending—includes welfare programs and other forms of financial assistance intended to support states with greater needs or lower incomes. This is the spending that directly reflects federal efforts to balance economic disparities, and is relevant to the discussion of the monies going to and from Washington. The second type of spending, however, is simply the cost of doing business: normal federal purchases of goods and services. This includes funding for military bases, government offices, infrastructure projects, and the procurement of equipment and supplies. These expenditures aren’t acts of generosity; they’re business decisions aimed at getting the best value for taxpayers.

And where does the federal government find that value? More often than not, in red states. Lower costs of living, lighter regulatory burdens, and leaner bureaucracies mean federal dollars go further. It’s not about politics—it’s about efficiency. The government isn’t subsidizing these states out of pity; it’s spending where it makes fiscal sense. Blue states like California or New York often miss out, not because they’re being punished, but because they’re simply too expensive to justify the return. If Washington operated by Newsom’s logic—intentionally directing funds to high-cost, inefficient states just to even the score—it would be mismanaging taxpayer money.

Take New York versus Florida as an example. In 2023, New York collected $103 billion in state taxes from 19.8 million people—over $5,200 per person—while Florida took in $56 billion from 22.6 million residents, or just $2,470 per capita. Yet Florida’s services often match or exceed New York’s bloated offerings. And voters are noticing: IRS data from 2021–2022 shows New York lost 180,000 residents while Florida gained 320,000. People—and federal dollars—are moving toward efficiency, not away from it.

Blue states can keep pushing the “moocher” myth, but it won’t fix the real problem: their own unsustainable governance.