[anemitz]

States that have low state and local taxes do so because the federal government subsidizes their low taxness.

Yes and no. Texas and Nevada are bottom 10 ranked on federal funding per capita. They also have no income tax. Alaska and Wyoming are top 10 ranked in federal funding per capita. So it's not as black and white as you're claiming. Revenue comes from many sources at the state level not just income: licenses, mineral rights, sales, property, etc..

[pwthornton]

You can't rely on income taxes a proxy for tax rates.

Many states with low or no income taxes have monster property taxes. State, local, and property taxes are all one bucket. You have to make sure you are counting all of these together when you talk about taxes.

I live in Maryland and my property tax is like 1/4th of my parents in Ohio, and there are a lot worse states for property tax than Ohio.

Texas is an outlier, however, due to its history with oil and mineral rights. Alaska is another one. These states didn't earn the natural resources they are exploiting, but they have benefitted from them considerably, and this has allowed them to operate differently than most other low-tax states.

[Nrsolis]

Earn?

Did NYC "earn" it's first-mover advantage, natural harbor, and particular terrestrial makeup that supports high-rise buildings on the solid granite beneath the feet of every NYC resident?

Did CA "earn" it's fertile central valley, diverse climates great for agriculture and recreation, and miles of gorgeous coastline?

Each wave of residents exploits the resources available to them. No more. No less.

Let's not pretend otherwise. Economics is not a morality tale.

[saalweachter]

While I'm not going to dispute your larger point, I do want to point out that New York was not originally the shipping capital of the colonies; Philadelphia was. New York City only became the center of trade that it was for so many years after constructing the Erie Canal, allowing trade to easily reach into the Great Lakes and the center of the continent. Many of New York's subsequent advantages (such as the dominance of the NYSE as the various exchanges consolidated) stem from this.

Likewise, California has a great climate for many types of agriculture precisely because it gets so little rain in the Central Valley; farmers can irrigate their crops to the ideal amount water at each point in their lifespan, while farmers elsewhere in the country are subject to the whims of nature. Integral to California's success in agriculture, then, is their investment in irrigation.

Again, I don't mean to dispute your core points, but while it's good to be lucky, investments also compound. California and New York have both historically invested in their economies through massive public works.

[imtringued]

I don't see your argument. Texas improved it's economy by digging out the fossil fuels. It's not like they automatically get oil out of a natural spring and just have to fill up their tankers with it.

Building oil pumps doesn't matter if there is no oil to be pumped. Therefore having the economic viability to build oil pumps is a geographic advantage.

Building a canal doesn't matter if it doesn't let you reach the center of the continent. Therefore the economic viability to build a canal is a geographic advantage.

Building an irrigation system doesn't matter if you cannot control the irrigation. Therefore the economic viability to build a precise irrigation system is a geographic advantage.

Those investments would be completely worthless without the geographic advantage that is needed to optimally use them. Nails don't hammer themselves but without nails there is nothing to hammer. Yet you seem to be focusing on only one of those and implying that someone else's hammer is not a real hammer, they just found the nails already in place in the furniture.

[saalweachter]

I'm not denying that some states got lucky on natural resources or geography, I'm saying that some states have also invested local resources in developing their economy. They do this by levying taxes on the state and local level and building infrastructure.

SALT deductions incentivize states and localities to do this. They're still incentivizing this, since the deductions were only capped and not eliminated. Do you think states were over-incentivized to invest in their own infrastructure previously?