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But it isn't that simple. State budgets are partly funded by federal taxes. Just skimming this abstract from the CBO report[0], in 2011, 25% of state and local government expenses were covered by federal grants amounting to over half a trillion dollars.

[0] https://www.cbo.gov/publication/43967

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Sure, I'm simplifying, but I think my point stands.

Federal tax as percent of GDP: 19% [1]

State and local tax as percent of GDP: 9% [2]

So, even if we bump up state and local expenditures to 11.25%, it still seems like we're getting a better deal from local governance.

1) http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

2) http://www.ncsl.org/documents/fiscal/TaxesandtheEconomy.pdf (a little out of date...)

As explained in other comments, Federal Govt is basically a giant insurance company with an army.

This is an over simplification as some States pay more in taxes then they get in return via various federal pay outs.

Some states get less in payouts than their _residents_ pay in taxes. But the state budgets are still larger with the federal payouts than they would be with only the state taxes.

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