Introduction
For decades, Americans have been subjected to the rhetoric of so-called “donor states”—the idea that wealthy states like California or New York are subsidizing poorer states like Mississippi or Arkansas. This narrative not only breeds arrogance in some quarters and resentment in others, but it fundamentally misunderstands the purpose of the federal union. The federal government was never meant to be a redistributive overlord, but a common voice for foreign policy, a shield for national defense, and a referee for interstate commerce. Instead, it has become a bloated dispenser of largesse, spending trillions and dividing states into "makers" and "takers."
What if we reimagined the way Washington is funded—not by taxing individuals directly, but by requiring states to contribute their share of the budget based on population? This paper outlines such a proposal, examines its objections, and shows how it would restore both balance and accountability in our federal system.
The Proposal
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Federal Budget Set First
Congress passes an annual budget as it does now. But instead of levying direct taxes on citizens, it identifies the total amount needed. -
External Revenues First
Customs duties, import tariffs, and other fees collected at the national level are counted against the total budget. This recalls the early republic, where tariffs made up the lion’s share of federal income. -
Apportionment by Population
Whatever remains after external revenues is divided among the states according to population. If the budget is $1 trillion, and $250 billion is covered by tariffs, the remaining $750 billion is apportioned per capita among the states. -
State Responsibility for Collection
Each state government determines how to raise its assigned share—whether by income tax, sales tax, property tax, or other means. The IRS shrinks, and the accountability shifts homeward.
Anticipated Objections and Rebuttals
1. Enforcement Will Be Ugly
Objection: Some states won’t pay; confrontation will ensue.
Response: Taxation is always coercive. This system at least directs the enforcement at the state level, where accountability is clearer. The federal government deals with states, not individuals. States then answer to their citizens, rather than Washington bypassing them entirely.
2. Poor States Will Be Crushed
Objection: States with weaker economies won’t be able to bear the burden.
Response: If a state mismanages its economy, people will leave. Outbound migration reduces its population—and therefore its quota. Conversely, states with healthy economies will attract people, and their quota will grow. The system naturally balances itself, rewarding competence and punishing failure.
3. States Will Compete in a "Tax War"
Objection: People will flee high-tax states for low-tax ones.
Response: Exactly. That’s the point. Citizens will see the direct results of bad policy. If enough Californians move to Wyoming, Wyoming will eventually have to raise taxes to support the larger population. This makes plain the truth that you cannot outrun bad governance; you must reform it or bear its consequences.
4. The Budget Is Too Large for This System
Objection: The modern federal government spends trillions—far more than tariffs and quotas could sustain.
Response: That is not a flaw; it is the cure. If citizens saw directly how much Washington was costing them per head, they would demand restraint. Pork-barrel spending and frivolous studies would no longer be hidden under the fog of deficit financing. Instead, taxpayers would push their states to rein in Congress and force it back to its constitutional essentials: defense, diplomacy, interstate commerce, and currency.
Philosophical Implications
This system rewrites the psychology of taxation:
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Today: Washington taxes individuals, redistributes money, and then boasts about which states are "donors" and which are "takers."
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Under the Proposal: Washington taxes states, and states must answer to their own people. The arrogance of "donor states" vanishes; each citizen counts equally, and each state carries only what its population demands.
It restores federalism by making the states once again the guardians of their people, not the passive dependents of a central bureaucracy.
Conclusion
Would this system require change of Biblical magnitude? Absolutely. It would take a constitutional amendment and a seismic shift in political will. It may not happen in our lifetime—perhaps never at all. But the conversation must begin. The current model of federal finance encourages bloat, dependency, and division. A population-based apportionment of the federal budget would restore accountability, humble Washington, and remind the states of their rightful role as co-sovereigns in this union.
The first step is to imagine it. The next is to speak it. And one day, perhaps, to reclaim it.
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