The way I always understood in-state vs out-of-state tutiton was that the cost of attending a college was $20,000 per year, for example. In-state students paid 20% of that; taxpayers the rest. Out-of-state students paid 80%; with the taxpayers picking up the remainder. Taxpayers subsidize the cost in both cases, the way I understood it.
Oh, hmmmm....I always understood it that in-state tuition was at a reduced rate simply because they already paid taxes. That there wasn't a "difference" to make up.
I'll have to check into that.