When Gov. Mary Fallin announced that she wouldn't support an Obamacare-related expansion of Medicaid, critics claimed she was essentially forcing Oklahomans to pay federal taxes to support Medicaid expansion in other states.
Those same critics are notably silent about a federal tax break that has the same practical effect: the deduction for state and local taxes. That break has been criticized as an indirect subsidy for liberal state governments that tax and spend freely. Citizens in states living within their means pay more in federal tax than their counterparts in high-tax states that are fiscal train wrecks.
Writing in The Washington Post, Charles Lane noted, “What the deduction does is enable higher-income states and localities to tax — and spend — more than they otherwise would, while shifting some of the cost to other states.”
In 2009, those living in California, New York and Illinois got more than a third of the deduction's total national value. On the other hand, Oklahoma tax filers claimed just six-tenths of 1 percent of the total national deduction provided by the tax break. Notably, California and Illinois are the United States' top contenders to become the nation's first failed states, the domestic equivalent of Greece.
Rewarding those states for supporting failed policies while citizens in better-managed states are effectively penalized is an odd policy. But supporters of Medicaid expansion don't mention the state-and-local tax break for the same reason they tout the Medicaid expansion: Both policies encourage government growth.
Critics are also off base with their tax-diversion critique of Fallin's decision. Because the federal government depends substantially on deficit spending, Fallin's rejection of Medicaid expansion effectively means the federal debt will be lower, not that local citizens' federal taxes will go elsewhere. Those tax payments were spent long before Oklahomans mailed a penny to the IRS.