If the blue states got their way, unrestrained by pressure from the red states, they would implement economic policies that would make France and Germany look prudent. Unemployment would quickly approach 20%. The educational model would be the Soviet Union. (Interesting to think how they might finesse the Civil War. Bad when they do it, good when we do it.)
Red states exercise a valuable restraint on blue state politicians, even at the local level. BTW, it would be a disaster for Canada and the EU.
You know as well as I all of those people in the new Blue Country would live in the Red Country to take advantage of the tax breaks. In fact, they'd probably wind up relocating, because their Blue Country would slap an extra tax on those who worked in Blue Country but lived in Red Country.