There’s a rumor floating around Washington that one of the ideas the “Supercommittee” might consider is a Medicaid cut and expanded state powers to tax. The idea is that Washington wins by cutting Medicaid spending. States break even because they lose Medicaid funding from Washington, but can raise taxes in areas they now cannot.
What is the interest of taxpayers in an idea like this?
This is a bad idea. At the end of the day, spending (but not taxes) would be cut in Washington, only for taxpayers to see their tax bills go up locally as their state governments got bigger. For the same size government as before, taxpayers would face a larger overall tax bill than before.
The goal of the taxpayer movement is not to increase the overall tax burden by letting states hike taxes while Washington’s tax burden remains unchanged. Furthermore, this maneuver would result in the same size government as before, albeit at a lower level. On net, cutting federal spending and raising state taxes is not a plan worth doing.