21 ms·

Japan's Hometown Tax

847 points by gwern 8y ago

pgz 8y ago
I always found this system very interesting, since the citizen can decide how some of their tax money is spent (besides voting). On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.
- 21 8y ago
  > On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy Everybody says that, Catalonia that it pays more to Spain that it receives back, California and New York to the rest of US... But it's the only way to have nation states, otherwise we'd have to go back to city states (which some people like Taleb actually advice).
  - jessaustin 8y ago
    It's inevitable given the political structure. Since votes are distributed by area and population rather than by wealth, wealthier political divisions will necessarily bribe poorer ones into political compromises that are closer to the wealthier divisions' preferences than they would have been without bribery. The only way to prevent that would be for the overall polity to have much lower taxes and thus much less money to divert to interdivisional bribery. (In many polities, this would be very much against the preferences of the wealthier divisions, so this "solution" is never seriously contemplated.) Of course, TFA describes a different way to come to substantially the same result. Tokyo still makes the important decisions.
    - overdrivetg 8y ago
      Wait - are you claiming that New Jersey is somehow bribing New Mexico for policy concessions? https://www.moneytips.com/is-your-state-a-net-payer-or-a-net-taker/356 https://www.moneytips.com/is-your-state-a-net-payer-or-a-net...
      - innocentfelon 8y ago
        Seems plausible. 1000mi of mostly rural interstate highways (how NJ gets its goods from points west), plus nuclear weapons development, testing, and disposal are popular enough with the NM locals, as are anti-poverty programs, but yank the federal funding, and the locals would be far less friendly to NJ telling NM to supply or pay for these things on its own.
      - jessaustin 8y ago
        New Mexico may be a bit of an outlier since they aren't deep red like some other western states? I would certainly say that New Jersey is bribing e.g. Montana, North Dakota, etc. If the residents of those states had their way, the Department of Interior would be run differently, entitlements would be lower, Israel wouldn't get so much support, etc.
        kevin_thibedeau 8y ago
        > entitlements would be lower That's just the political rhetoric. Red-staters love their entitlements just so long as they go to the "right" people.
        jessaustin 8y ago
        The red states are not a monolith. You might get a majority of support for some entitlements in Georgia or West Virginia. You won't get that in Wyoming or the Dakotas. Maybe those aren't the entitlements you're talking about, though. This "right people" entitlement: which one is that? Which entitlement goes to white males but not minority females? If you mean some boondoggle for rich people, I already mentioned the military and Drug War spending upthread. Besmirching all entitlements by association with that crap would be dishonest.
    - simias 8y ago
      "Bribe" is way too loaded, you could also call it social justice and redistribution, a way to give poorer areas better chances to improve their life. Saying that redistribution is bribery is about the same level of discourse as saying that taxes are theft and prison kidnapping.
      - jessaustin 8y ago
        Those who pay attention to our "justice" system might go along with part of that... Besides lots of these transfers have nothing to do with "social justice"; they're military spending or Drug War stupidity or similar. The point is, if Kansas were run the way that actual Kansans would democratically choose to run it, it would be even more awful than it already is. (It would also be better, in some ways, but we don't need to argue about that.) Those sweet federal dollars convince them to make different political decisions than they would have made otherwise.
      - gknoy 8y ago
        > Saying that redistribution is bribery is about the same level of discourse as saying that taxes are theft and prison kidnapping I have friends who say literally that (taxes are theft). How does one argue against that? I have a hard time finding a way that it's technically wrong. I mean, taxation is literally the state taking your money (whether you want it or not, voted against it or not, etc). I can't help but feel that there's some difference, but I can't find what it is. Do you have suggestions on readings that would inform me better on the issue?
        jlawson 8y ago
        Thieves usually don't give you something in return. It's more like "a deal you can't refuse". You get something back, but it's probably not just what you wanted. But it's something. Taxation is much more like "protection money" than theft.
  - blattimwind 8y ago
    Tax redistribution inside nations or in nation unions (like the EU) is pretty much an investment. It generally generates more money than spent on it. E.g. Germany is the largest net contributor to the EU, but guess what would happen if Germany decided to stop putting out those few billions a year. Yeah, not so good for the economy (not just of Germany, pretty much everyone). Turns out, those few billions spurred trade much greater than that. It's literally "one stick, alone, weak — many sticks, together, stronk". Just that the bundle is stronger than its constituents. (I've heard the UK is working earnestly on an experiment confirming this.)
    - thaumasiotes 8y ago
      > It's literally "one stick, alone, weak — many sticks, together, stronk". I can't wait for tax redistribution to be renamed "fascism". :D
      - barrow-rider 8y ago
        For the uninitiated: Italian Fascism was so named as a reference to classical Roman Fasces, which was a bundle of sticks or rods wrapped around an axe that symbolized authority.
        jlawson 8y ago
        It symbolized solidarity, not so much authority. The small sticks work together and act as one.
        int_19h 8y ago
        Fasces very much symbolized authority initially. It is no coincidence that the rods in fasces were birch. And, of course, there's that ax in the middle...
    - labster 8y ago
      > It's literally "one stick, alone, weak — many sticks, together, stronk". So that's why they say those people are living in the sticks.
  - dsfyu404ed 8y ago
    California and New York are the size of countries. Why couldn't they function on their own as countries? I think a lot of states would be better served if they operated more autonomously and the federal government managed less of their business. I get that in certain cases that's not the optimal situation for resource allocation but freedom has a price.
    - pantonia 8y ago
      They are the size of countries like Italy. Read above, they too are annoyed at the freeloaders they have to support. Why should the Bay Area have to subsidize Bakersfield?? Make them city-states and Manhattan will resent the Bronx (not that they don't now).
    - dmurray 8y ago
      They could function as independent countries, for better or worse. But it generally looks like states don't want more autonomy: over 240 years the US federal government has taken on more and more power at the expense of the states, facing minimal resistance apart from a single bloody civil war where the heroes are universally agreed to be the side fighting for more powers for the federal government.
      - dragonwriter 8y ago
        > civil war where the heroes are universally agreed to be the side fighting for more powers for the federal government. The Union wasn't fighting for more powers for the federal government, just for the integrity of the existing federal government and it's powers. The war resulted in some expansion of federal power, but that wasn't what motivated the Union.
        dmurray 8y ago
        Sure, that's a reasonable way to look at it, and the only way consistent with having the victors write the history books. In the same way that the Commerce Clause always allowed the federal government to regulate growing wheat for personal consumption, the Constitution already allowed the federal government to forbid slavery - it just took a civil war or a supreme court hearing to make sure everyone agreed on that. Under that view, the 13th Amendment was legally redundant, but was passed just to leave absolutely no room for doubt.
  - DrJokepu 8y ago
    Economic inequalities exist on every level. In a sovereign city state, the wealthier neighborhoods would subsidize the less wealthy neighborhoods.
- SmellyGeekBoy 8y ago
  > On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime. Heh, funny that richer parts of the EU say this about Italy itself.
  - HarryHirsch 8y ago
    That's just because their unwashed masses are only familiar with economic migrants from Southern Italy. If you paid any of them a holiday to Turin or Milan they wouldn't know what befell them, they couldn't even identify the country!
    - coldtea 8y ago
      Thanks for the subtle racism towards southern italians...
      - delinka 8y ago
        Are Souther Italians their own race?
        narag 8y ago
        I thought that the current consensus was that races don't really exist. "Modern" racism can be more subtle than that, more about xenophobia or just classism.
        ensignro2340 8y ago
        > I thought that the current consensus was that races don't really exist. Races do not exist biologically[0][1], but they do 'exist' as a social construct[2][3][4]. And I second your second sentence :) [0] https://www.youtube.com/watch?v=ZrKrGkgeww4&index=4&list=PLyVghncmfCibQ1kgPyQEuRfb2V8qQHP_B&t=0s https://www.youtube.com/watch?v=ZrKrGkgeww4&index=4&list=PLy... [1] https://www.scientificamerican.com/article/race-is-a-social-construct-scientists-argue/ https://www.scientificamerican.com/article/race-is-a-social-... [2] https://en.wikipedia.org/wiki/Social_constructionism https://en.wikipedia.org/wiki/Social_constructionism [3] https://www.theatlantic.com/national/archive/2013/05/what-we-mean-when-we-say-race-is-a-social-construct/275872/ https://www.theatlantic.com/national/archive/2013/05/what-we... [4] https://www.psychologytoday.com/us/blog/without-prejudice/201612/race-social-construction https://www.psychologytoday.com/us/blog/without-prejudice/20...
- asmithmd1 8y ago
  For US income taxes the only amount of your taxes that you can direct is $3 for the presidential election fund. Why not expand this and let you pick from a dozen or so categories?
  - kevin_thibedeau 8y ago
    Then people would be gravely offended by who was and wasn't on the list of choices.
    - Brockenstein 8y ago
      Well they're already greatly offended by taxes and the idea that civilization requires money to run... I think outside of being offended, you'd just have a hard to getting any agreements on what would qualify.
      - asah 8y ago
        I'd love to see a large scale survey where people allocate their taxes, and see what the allocation actually comes to! The HN crowd might over-allocate $1000s per person to NSF, NIH and NASA and short Social Security while 100+M people contribute $0 to science, but depend on SS to survive. We might end up with the same budget but people feeling more in control. We'd also see large scale advertising which is actually a good thing: ads are pretty cheap/efficient, make people feel better about their government and society, and employ an army of creative people. I imagine you wouldn't see branches of government running negative ads against each other - it would be more like the feel-good military recruiting ads today. Sorry if this sounds utopian, I've had a rough week (in addition to everybody's rough week) and need something to feel good about.
        jfim 8y ago
        That would end up in a popularity contest between agencies, which I doubt is desirable, especially considering some of those disliked agencies [1] are actually useful (like the FDA and the department of education). And hang in there, the weekend is almost there. :-) [1] https://www.google.com/amp/s/www.washingtonexaminer.com/which-federal-agencies-do-americans-hate-most%3f_amp=true https://www.google.com/amp/s/www.washingtonexaminer.com/whic...
- narag 8y ago
  ...around half of my taxes go to the poorer regions... And then the cause of the problem is presented as if it were the solution.
- walterstucco 8y ago
  I live in northern Italy, but I am from Rome, "Roma Roma" as we say in Italy This is simply not true Half of your taxes pay for Formigoni that takes bribes from healthcare in Lombardy Pointing out what's wrong in our country is good, blindly believing in black propaganda is not.
- ai_ia 8y ago
  On a side note, is there any system that exists where citizen can decide to a greater autonomy how there tax money is spent?
  - gph 8y ago
    Libertarianism. I hear they are testing it out in Oregon. /s
    - mmirate 8y ago
      Replace "Oregon" by "New Hampshire", and you can say the words with pride instead of sarcasm.
      - int_19h 8y ago
        Still going to be sarcasm, sorry. How many of those who pledged to move have actually moved?
        mmirate 8y ago
        Sorry, I don't have those numbers on-hand. What I do have on-hand is that NH has a higher median income than any other nation in the world (incl Luxembourg), despite being a net-payer of federal taxes. (Source: https://mises.org/wire/if-sweden-and-germany-became-us-states-they-would-be-among-poorest-states https://mises.org/wire/if-sweden-and-germany-became-us-state...)
        int_19h 8y ago
        I seriously doubt it has anything to do with the FSP. Of course, the median income metric is not the end-all be-all, either. For example, it ignores all the state-provided benefits that those high taxes pay for.
        danso 8y ago
        It's true that NH has traditionally been in the top-tier of states when it comes to median household income. In the 2016 ACS, it appears to have reached the top: https://www.pressherald.com/2017/09/13/the-state-with-highest-median-income-is-new-hampshire/ https://www.pressherald.com/2017/09/13/the-state-with-highes... But its lead is not an overwhelming one. Connecticut's 2016 median hh income was just ~$350 less. According to the the previous ACS in 2015, NH was number 8. And 6 of the top 7 were traditionally blue states. https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_income https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ... - 1. Maryland - 2. DC - 3. Hawaii - 4. Alaska - 5. New Jersey - 6. Connecticut - 7. Massachusetts
- mann1x 8y ago
  Amazingly you keep living under your dome of ignorance, blind to the obvious, spreading lies around. Your half taxes are stolen by criminals all around Italy, most of them are your neighbors in the North. Going around on a Ferrari, wearing Rolex and spending hundreds of Euro for an aperitivo. Your money too. That money it's routed to the South and mostly goes back to "hard working" companies from the North. In inflated or just fake invoices, overpriced goods. Most of the successful companies in the South are just plain mafia or subdued by them. Who doesn't get burned to the ground. Honest people in the South they have to either work for them for half your salary or just spread around the world. That's why most of Italian ex-pats are form the South: they work twice hard as you, earn less and are forced to a very uneasy self-imposed exile. You should take conscience how lucky you are. There's the same amount of good & bad people all around Italy: those in the North are just lucky because the South is more beautiful and rich, perfect prey to ransack. Thanks to the populist far-right extremists of the Lega nothing will change anytime soon. They profited on this kind of ignorance to take power, accusing "Romans" to steal your money. While spreading hate, racism, xenophobia and homophobia they took advantage of the system they promised were fighting and stole hundreds of millions. That's their chunk of your half taxes.
  - dang 8y ago
    This post breaks the HN guidelines. Personal attacks, as well as political and national (or whatever this) flamewar, will get you banned here. Please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and don't post like this to HN.
kposehn 8y ago
This is absolutely fascinating, and (while Japanese culture has a number of key differences to the US that make it work) something that we can learn a lot from.
eigenspace 8y ago
That was a fascinating read! I love when things like this happen and some new emergent behaviour appears that was unexpected. This did end up much better than most perverse incentive situations. In fact, I'm not even sure I'd call this a perverse incentive but maybe I'm musinderstanding the definition.
- gwern 8y ago
  I consider it perverse because it incurs overhead in making the payments (eg if you send a town $100, get back a gift card for $100, and cash it for $97, that's $3 burned for nothing whatsoever than if they could've just transferred $100 into your bank account or not taxed it in the first place), deadweight loss in gifts (you don't value those hometown meibutsu at their market value to other people), overhead from the incentivized marketing competition (ad campaigns aren't free), and of course, the existence of a competition at all means that the hometown which incurred the expenses of rearing/educating you in the first place probably isn't going to get your tax revenue because they don't offer anime pineapple rewards or whatever is hip at the moment. None of that was intended nor is it useful. Interesting & amusing, but not useful. (And anyway, I had to title it something. 'Japan's Hometown Tax' makes it sound unutterably boring & technical, when the second-order effects are what's interesting.)
  - avar 8y ago
    It's only perverse and pointlessly burning money if you exclusively look at it from an economics perspective, but most countries have some sort of highly politicized redistribution mechanism, so it's also a sociological and political question. I.e. you can look at it like an accountant and consider it a 3¢ loss for every $1, or you could consider that perhaps a system like this increases societal goodwill towards redistributing money to poorer parts of Japan. If it wasn't for that goodwill would you have $1 to work with in the first place? Or would political opposition to the redistribution already have cut that down to 90¢?
    - gwern 8y ago
      I struggle to see what beneficial social effects there are from most people cynically ticking a box on a website to get half back as a gift card they immediately sell for 97% face value. The original intent of the tax program in compensating rural areas, yes; what it has morphed into, no.
overdrivetg 8y ago
Do you think some kind of bidding or voting on the maximum donation amounts involved would make sense? Ie, cities each vote on what they think a "proper" maximum reward would be, then set it at the average. Relatedly, I'm not sure why a supermajority of cities agreeing to limit gifts would be generally in their best interests: 1. Lower status ("less popular") cities gain more donations via rewards 2. I would guess status/popularity probably follows a power curve 3. Therefore the long tail cities are able to flatten the distribution curve by bidding their way up 4. If they went back to a level playing field, they would drop back down the curve, likely losing the (smaller but nonzero) overall financial boost gained after bidding Basically: if I am a small city with few "natural" benefactors, I can bid my way up the curve (admittedly depending on the elasticity of "demand") such that I gain more from more donations than I lose in larger rewards. ...unless the market today just drives everyone to offer the maximum reward? Super interesting though, thank you for sharing this!
pessimizer 8y ago
This sounds like a good way to redistribute funds, but at the cost of lowering total revenue. If taxes are raised to make up for the often hometown-branded but often highly liquid gifts, it will be fine, but 1) I imagine raising taxes is going to be highly sticky, and 2) it's a flat, regressive tax, making it either forced gift-buying for people who probably shouldn't be buying themselves gifts or a government subsidy for the voucher-brokers. If you're a Japanese politician, you should probably invest heavily in voucher-brokers, then lobby for a rise in the tax.
- gowld 8y ago
  I'd expect that the end-state would be that tax rates go up to maintain desired revenue levels, the localities all bid up to the max amount of refund, and the whole system works not quite as well as the day before the system was invented -- except that a bunch of works gets expended on the useless competition for funds, and the money distribution gets unfairly balanced based on whichever locality has more clever marketing. This is exactly counter to the concept government -- a system that should be run as a monopoly ends up being full of waste due to competition with no net improvement.
  - pessimizer 8y ago
    > the money distribution gets unfairly balanced based on whichever locality has more clever marketing. You might be able to mostly solve this by automatically registering people to a default hometown, and making it very annoying to change your registration. That latter part might be doable by simply allowing the municipalities to administrate their own hometown lists, so you'd have to contact your current hometown to transfer your registration to a your new hometown. They'd be economically motivated to make it as difficult as canceling a gym membership.
- csours 8y ago
  Liquid gifts you say? Well it just so happens my 'hometown' is Loretto, Kentucky. https://www.google.com/maps/dir//Maker's+Mark+Distillery,+3350+Burks+Spring+Rd,+Loretto,+KY+40037/ https://www.google.com/maps/dir//Maker's+Mark+Distillery,+33...
iscrewyou 8y ago
What a fascinating concept. I would love to donate to my hometown and just get some raisins back as a gift once in a while. But I could really see the idea struggling through city council meetings because of the “well you could just donate to the city and then just buy some raisins on the side?”. And that’s a testament to how ideas can evolve overtime and be accepted which otherwise would never be considered.
- ajmurmann 8y ago
  I think the "but some raisins in the side" thing wouldn't happen, since it's a opt-in system and it's in the interest of the town to keep the relationship up and stay on your mind.
noisy_boy 8y ago
Very interesting. A scenario came to mind - a city sends back a local delicacy. Then it notices that the number of donators is increasing. Looks further into it and finds that the delicacy is very popular. Now it has identified a product that it can independently promote and the city can earn more revenue. So many possibilities :)
- brazzy 8y ago
  Local food delicacies are a major industry in Japan due to the formalized culture of travel souvenirs, and it's pretty much guaranteed that anything that could conceivably be promoted as one, already is.
  - gorpomon 8y ago
    On my first visit to Japan I went up to Takayama. I had never heard of Hida beef before that visit, but now I've eaten enough for a lifetime.
resoluteteeth 8y ago
Couching this in terms of Japanese culture is unhelpful in my opinion. The return gifts probably wouldn't exist in the first place elsewhere, but allowing them is simply a blatant loophole that various local governments have cynically abused to increase their revenue and this is something that would happen in any country. The biggest problem is that some local governments are apparently giving return gifts that have a value that's higher than the 2000 yen part of the hometown tax that isn't tax deductible, which means that by opting in to donating to these local governments you do slightly better than if you didn't donate money in the first place. These governments are obviously trying to get people with absolutely no local connection to send money purely for the gifts. One option would be to set a limit on the value of the gifts, but there's absolutely zero reason to allow the return gifts in the first place. The whole reason for the first 2000 yen not being tax deductible is this is something you are only supposed to do if you seriously want your money to go to a local government, and allowing non-taxed return gifts defeats the intention of how the system is set up. Having tax money go back into return gifts is also ridiculously inefficient. Unfortunately, based on the way the government is set up, rural votes have disproportionate power, and for this reason the LDP has a tendency to pander to rural interests, so they probably have no interest in eliminating the gifts entirely. However, at least they recently announced that they are looking into introducing legislation to limit the value of gifts (and ban the worst abusers from participating entirely) in the next regular session of the Diet.
- usaar333 8y ago
  > . The whole reason for the first 2000 yen not being tax deductible is this is something you are only supposed to do if you seriously want your money to go to a local government, and allowing non-taxed return gifts defeats the intention of how the system is set up I definitely found it strange Japan is allowing the local governments to gift 50% back. In the US, legally any portion of a charitable contribution you get back in personal benefit (e.g. an expensive banquet) is not tax deductible.
  - wyattpeak 8y ago
    It would probably be instructive to know how actual charitable donations are handled in Japan. I have no idea, but in a highly reciprocal culture I could well imagine that effectively punishing reciprocation in that way would be a political non-starter.
CodesInChaos 8y ago
Interesting how in some contexts kickback is illegal fraud/corruption, while here the government of a developed democratic country openly engages it. https://en.wikipedia.org/wiki/Kickback_(bribery) https://en.wikipedia.org/wiki/Kickback_(bribery)
- resoluteteeth 8y ago
  It's also interesting in the context of how strict Japan's rules for election campaigns are. For example, a few years ago Justice Minister Midori Matsushima got in trouble for distributing essentially worthless paper fans since they were considered gifts, whereas paper pamphlets would have been okay, and she had to resign as minister. https://www.dailymail.co.uk/wires/ap/article-2799975/Japans-justice-minister-undone-cheap-paper-fan.html https://www.dailymail.co.uk/wires/ap/article-2799975/Japans-...
  - kbrosnan 8y ago
    It is about reach, a leaflet would reach one person. That person might talk to a person or two about the information in the leaflet. One person with a fan could be seen by many thousands of people on their daily commute.
    - resoluteteeth 8y ago
      That might be a reasonable basis for a rule in theory, but it's not the issue in this case under Japanese election law. Something that has any value and counts as a gift and therefore isn't allowed, even if the value is extremely small. There are other various other rules about campaign activity though (where/when it can be performed).
make3 8y ago
Won't this degenerate to a pure bidding war, with people sending their money to the town that gives them the largest fraction of cash equivalent returns, transforming into only a tax reduction ? like, cities will bid to something like ninety-something% cash equivalent, to the very limit of their margin because it's winner takes all.
- vxNsr 8y ago
  If you got to the end of the article you'd know that's exactly what happened. The central gov stepped in and limited the quid pro quo gifts to 50% of the donation amount. so now that's become the defacto standard for the return "gift".
chadlavi 8y ago
this is really deeply fascinating!
rb808 8y ago
The American system (& Japanese?) where schools are mostly funded by local taxes is a root cause of inequality, poverty and unfairness in the USA. Schools in Europe and Australia are funded by centralized government more evenly so doesn't have this problem and dont need this donate to a region system the article talks about. I think its much fairer.
- ekianjo 8y ago
  > Schools in Europe and Australia are funded by centralized government This has the other problem that in Europe, governments write all the education program to the letter and this leads to complete brainwashing of the kids or silly educational policies (like completely changing how kids learn how to read, which led to about half a generation of kids with very poor reading/orthographic skills in France just to name one disaster), so pick your own poison.
  - mschuetz 8y ago
    > leads to complete brainwashing of the kids Says the one (I presume) from the country that recites the pledge of allegiance in school.
    - gknoy 8y ago
      I find that saying the pledge of allegiance (when I visit my kids' schools for things) is an interesting affair. It's an opportunity to reflect on both the ideal of the Republic, and the ways / extent that the state of the Union has changed over time. I find it poignant that I am pledging allegiance to the Flag and the Republic, rather than to the political party in charge, or to the federal government, etc. Are the differences meaningful? Why? What can I be doing better as a citizen? These are all questions that can run through my mind when saying the pledge with mindfulness. You're right, there's probably an element of brainwashing there. However, one can also use it as an opportunity to meditate on civic duty. :)
  - Arnt 8y ago
    This is HN not facebook. People here are used to reading metrics, so you can elaborate. Show numbers instead of saying "very poor". Link to graphs.
ElBarto 8y ago
Considering the ups and downs of the Japanese economy this can also be seen as a subsidy to boost consumption and economic activity.
village-idiot 8y ago
Classic case of "Tax Systems are Really Hard to Design" in action.
dsfyu404ed 8y ago
The system described sounds awesome. As someone in the US I would love to pay a portion of my taxes to a state/town that isn't ruled by corrupt and inept busybodies who's politics I disagree with. Getting a some % back or having my corrupt dump of a state match the donation would just be icing on the cake. 10% losses due to middle men doesn't sound that bad when it gets you the freedom to choose where your tax dollars are spent.
sonnyblarney 8y ago
It's a wonderful idea in principle. I love the fact that regions respond with simple, relevant gifts. I wonder if would be more appropriate if: a) you could only give to 'where you went to school' and b) regions could only respond with a nominal, non-cash gift, like a fruit, flower, or some culturally relevant thing. It would close the loophole, provide for meaningful tax redistribution and encourage legitimate cultural contact between regions and the mega-centre. Of course trying to get big business out of Tokyo might be an opportunity as well, though that's a hard thing. Creating industrial clusters is hard, and regions fight over it.
aurelianito 8y ago
The mechanism used in Japan to compensate for the brain-drain should be used worldwide.
vvillena 8y ago
I really like the basic idea of being able to choose a town or region where an alloted part of one's taxes will go. I live outside my hometown for business reasons, so I'm paying taxes on the most well-funded region in my country. Even if the government redistributes tax money, I'd love to have a small say in where my money goes.
dorfsmay 8y ago
There's an equivalent issue with city with large suburbs: companies in the city core pay a lot of local taxes that stays within the city, but living in the city is too expensive for 80% of the employees who live in the suburbs, which cannot benefit from local taxes paid by the big companies.
- paxy 8y ago
  The problem usually is that homeowners in the suburbs vote to keep their own property taxes extremely low, and then blame corporations when there isn't enough money to run things.
deleted 8y ago
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Balgair 8y ago
I LOVE this idea! Here in the US, it could really help out rural communities. The best part is that it is 'free' to everyone; you've already paid the taxes. Small communities could, and do, organize festivals based on local culture: Trout fishing in the summer, Ice festivals in the winter, Duck races in the spring, etc. They get people interested in some aspect of the community, be it a festival, music, the climate, foods, textiles, history, etc. Either way, the community sends stuff out or brings people into itself for 'free' as the taxes have already been paid. This incentivizes these small communities to plan for the festivals, to clean up the streets, to pay people to make it look nice, get a bunch of bunting ready for the 'homesick' tourists that they sent AirBNB vouchers out to. People come in, spend money at the diners and in the shops, at the mechanic's when a tire goes flat. There are knock-on effects that the community feels. Or it incentivizes them to get better at food/textile/goods production. Maybe they make a mean steamed-ham. They get better at curing and steaming the hams, they find a niche in the market they didn't know they had, they hire more workers to fill the niche. City-slickers get some steamed-hams, realize that they don't have any rolls to eat them with, and go out and buy some. Again, knock-on effects. For communities that are very small, they could run mini-lotteries, like one during a Wednesday night bowling league. You sign up, they draw a name out of a hat, you get 10% of everyone's tax money that entered (something less than the 30% that the community would have sent out). Communities that don't participate still receive taxes as before. Some that choose to spend these taxes are taking a chance, true. But, I feel that this 'priming of the pump' is fantastic idea. It gets people moving about, making things, buying meals and plane tickets.
- gph 8y ago
  Did you read the entire article? It's not really 'free to everyone', it's not like it's magic money. It's more like a transfer of tax revenue from Tokyo to rural communities, with a bit of a kickback to the tax payers. And while your vision sounds nice, the end of the article made it sound more like it's become a race to the bottom with most rural towns offering the maximum amount allowed in gift vouchers which people resell for cash. So it's mostly just a convoluted tax distribution/credit system in a lot of ways. And as much as it would be nice to have something like what you wrote, it would be near impossible to set out rules such that it didn't become another cynical race to maximize profits by attracting 'donors'. Even if you outlawed gift cards, there's always going to be some good/commodity a community can offer that will hold a liquidable cash value.
paxy 8y ago
> A few rounds of vigorous capitalism later I love this line
_0nac 8y ago
I see a lot of moaning about inefficiency here, but here's a point of comparison. During the Bubble years in the late eighties, when many rural areas were feeling left out, there was a scheme to give basically every municipality in Japan a large lump sum of money ($10m?), no strings attached, except that it had to be used for building something new. This, as you might guess, was an incredible waste of money. Many podunk towns built flashy "multi-purpose halls" (多目的ホール) perfect for all those symphony orchestras just dying to perform in the middle of nowhere. More memorably, the town of Utazu, Kagawa purchased a solid gold toilet...! http://english.cri.cn/6909/2010/09/09/1901s593626.htm http://english.cri.cn/6909/2010/09/09/1901s593626.htm https://www.emporis.com/buildings/191596/gold-tower-utazu-japan https://www.emporis.com/buildings/191596/gold-tower-utazu-ja...
Pxtl 8y ago
Anybody else figure out the endgame when they saw the beginning? "Oh crap, the hometowns just kick back a percentage to the taxpayer and suddenly Tokyo is bankrupt - as the hometowns outbid each other in a race to the bottom, eventually they lose too and it ends just being an expensive and complicated tax cut". Reality turned out even worse, with brokers skimming off a percentage. I suppose it's fair. In Japan, registering yourself in Delaware for bullcrap reasons isn't just for corporations anymore!
- techman9 8y ago
  Can you explain a bit more more about why you believe Delaware is the proffered place to register a corporation?
  - Pxtl 8y ago
    https://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html https://www.nytimes.com/2012/07/01/business/how-delaware-thr...
WalterBright 8y ago
> it’s like running an e-commerce business with the special wrinkle that your customers are entirely price insensitive. It's obviously very economically inefficient. The larger this thing grows, the more it will distort and hurt the economy.
an4rchy 8y ago
Super interesting policy! I was thinking about why Tokyo doesn't do the same and reciprocate, thereby competing with the smaller towns. I do realize that Tokyo/(any other big city) wouldn't want to do this till the number of people opting in hits a threshold within their city but maybe that is the equilibrium point. Does anyone have any insight into that?
ajuc 8y ago
Poland has something similar on regional (not city) level, it's called Janosikowe (from Janosik - a Polish Robin Hood), and it's much less flavorful than the Japanese thing, it's just a percentage of local taxes paid by the richest regions to the poorest regions.
mjevans 8y ago
Taxes automatically withheld by employers at the correct rate. Yes please, this is how it should work for most of the population without special issues.

847 points by gwern 8y ago

pgz 8y ago

I always found this system very interesting, since the citizen can decide how some of their tax money is spent (besides voting). On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.

21 8y ago
> On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy Everybody says that, Catalonia that it pays more to Spain that it receives back, California and New York to the rest of US... But it's the only way to have nation states, otherwise we'd have to go back to city states (which some people like Taleb actually advice).
- jessaustin 8y ago
  It's inevitable given the political structure. Since votes are distributed by area and population rather than by wealth, wealthier political divisions will necessarily bribe poorer ones into political compromises that are closer to the wealthier divisions' preferences than they would have been without bribery. The only way to prevent that would be for the overall polity to have much lower taxes and thus much less money to divert to interdivisional bribery. (In many polities, this would be very much against the preferences of the wealthier divisions, so this "solution" is never seriously contemplated.) Of course, TFA describes a different way to come to substantially the same result. Tokyo still makes the important decisions.
  - overdrivetg 8y ago
    Wait - are you claiming that New Jersey is somehow bribing New Mexico for policy concessions? https://www.moneytips.com/is-your-state-a-net-payer-or-a-net-taker/356 https://www.moneytips.com/is-your-state-a-net-payer-or-a-net...
    - innocentfelon 8y ago
      Seems plausible. 1000mi of mostly rural interstate highways (how NJ gets its goods from points west), plus nuclear weapons development, testing, and disposal are popular enough with the NM locals, as are anti-poverty programs, but yank the federal funding, and the locals would be far less friendly to NJ telling NM to supply or pay for these things on its own.
    - jessaustin 8y ago
      New Mexico may be a bit of an outlier since they aren't deep red like some other western states? I would certainly say that New Jersey is bribing e.g. Montana, North Dakota, etc. If the residents of those states had their way, the Department of Interior would be run differently, entitlements would be lower, Israel wouldn't get so much support, etc.
      - kevin_thibedeau 8y ago
        > entitlements would be lower That's just the political rhetoric. Red-staters love their entitlements just so long as they go to the "right" people.
        jessaustin 8y ago
        The red states are not a monolith. You might get a majority of support for some entitlements in Georgia or West Virginia. You won't get that in Wyoming or the Dakotas. Maybe those aren't the entitlements you're talking about, though. This "right people" entitlement: which one is that? Which entitlement goes to white males but not minority females? If you mean some boondoggle for rich people, I already mentioned the military and Drug War spending upthread. Besmirching all entitlements by association with that crap would be dishonest.
  - simias 8y ago
    "Bribe" is way too loaded, you could also call it social justice and redistribution, a way to give poorer areas better chances to improve their life. Saying that redistribution is bribery is about the same level of discourse as saying that taxes are theft and prison kidnapping.
    - jessaustin 8y ago
      Those who pay attention to our "justice" system might go along with part of that... Besides lots of these transfers have nothing to do with "social justice"; they're military spending or Drug War stupidity or similar. The point is, if Kansas were run the way that actual Kansans would democratically choose to run it, it would be even more awful than it already is. (It would also be better, in some ways, but we don't need to argue about that.) Those sweet federal dollars convince them to make different political decisions than they would have made otherwise.
    - gknoy 8y ago
      > Saying that redistribution is bribery is about the same level of discourse as saying that taxes are theft and prison kidnapping I have friends who say literally that (taxes are theft). How does one argue against that? I have a hard time finding a way that it's technically wrong. I mean, taxation is literally the state taking your money (whether you want it or not, voted against it or not, etc). I can't help but feel that there's some difference, but I can't find what it is. Do you have suggestions on readings that would inform me better on the issue?
      - jlawson 8y ago
        Thieves usually don't give you something in return. It's more like "a deal you can't refuse". You get something back, but it's probably not just what you wanted. But it's something. Taxation is much more like "protection money" than theft.
- blattimwind 8y ago
  Tax redistribution inside nations or in nation unions (like the EU) is pretty much an investment. It generally generates more money than spent on it. E.g. Germany is the largest net contributor to the EU, but guess what would happen if Germany decided to stop putting out those few billions a year. Yeah, not so good for the economy (not just of Germany, pretty much everyone). Turns out, those few billions spurred trade much greater than that. It's literally "one stick, alone, weak — many sticks, together, stronk". Just that the bundle is stronger than its constituents. (I've heard the UK is working earnestly on an experiment confirming this.)
  - thaumasiotes 8y ago
    > It's literally "one stick, alone, weak — many sticks, together, stronk". I can't wait for tax redistribution to be renamed "fascism". :D
    - barrow-rider 8y ago
      For the uninitiated: Italian Fascism was so named as a reference to classical Roman Fasces, which was a bundle of sticks or rods wrapped around an axe that symbolized authority.
      - jlawson 8y ago
        It symbolized solidarity, not so much authority. The small sticks work together and act as one.
        int_19h 8y ago
        Fasces very much symbolized authority initially. It is no coincidence that the rods in fasces were birch. And, of course, there's that ax in the middle...
  - labster 8y ago
    > It's literally "one stick, alone, weak — many sticks, together, stronk". So that's why they say those people are living in the sticks.
- dsfyu404ed 8y ago
  California and New York are the size of countries. Why couldn't they function on their own as countries? I think a lot of states would be better served if they operated more autonomously and the federal government managed less of their business. I get that in certain cases that's not the optimal situation for resource allocation but freedom has a price.
  - pantonia 8y ago
    They are the size of countries like Italy. Read above, they too are annoyed at the freeloaders they have to support. Why should the Bay Area have to subsidize Bakersfield?? Make them city-states and Manhattan will resent the Bronx (not that they don't now).
  - dmurray 8y ago
    They could function as independent countries, for better or worse. But it generally looks like states don't want more autonomy: over 240 years the US federal government has taken on more and more power at the expense of the states, facing minimal resistance apart from a single bloody civil war where the heroes are universally agreed to be the side fighting for more powers for the federal government.
    - dragonwriter 8y ago
      > civil war where the heroes are universally agreed to be the side fighting for more powers for the federal government. The Union wasn't fighting for more powers for the federal government, just for the integrity of the existing federal government and it's powers. The war resulted in some expansion of federal power, but that wasn't what motivated the Union.
      - dmurray 8y ago
        Sure, that's a reasonable way to look at it, and the only way consistent with having the victors write the history books. In the same way that the Commerce Clause always allowed the federal government to regulate growing wheat for personal consumption, the Constitution already allowed the federal government to forbid slavery - it just took a civil war or a supreme court hearing to make sure everyone agreed on that. Under that view, the 13th Amendment was legally redundant, but was passed just to leave absolutely no room for doubt.
- DrJokepu 8y ago
  Economic inequalities exist on every level. In a sovereign city state, the wealthier neighborhoods would subsidize the less wealthy neighborhoods.
SmellyGeekBoy 8y ago
> On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime. Heh, funny that richer parts of the EU say this about Italy itself.
- HarryHirsch 8y ago
  That's just because their unwashed masses are only familiar with economic migrants from Southern Italy. If you paid any of them a holiday to Turin or Milan they wouldn't know what befell them, they couldn't even identify the country!
  - coldtea 8y ago
    Thanks for the subtle racism towards southern italians...
    - delinka 8y ago
      Are Souther Italians their own race?
      - narag 8y ago
        I thought that the current consensus was that races don't really exist. "Modern" racism can be more subtle than that, more about xenophobia or just classism.
        ensignro2340 8y ago
        > I thought that the current consensus was that races don't really exist. Races do not exist biologically[0][1], but they do 'exist' as a social construct[2][3][4]. And I second your second sentence :) [0] https://www.youtube.com/watch?v=ZrKrGkgeww4&index=4&list=PLyVghncmfCibQ1kgPyQEuRfb2V8qQHP_B&t=0s https://www.youtube.com/watch?v=ZrKrGkgeww4&index=4&list=PLy... [1] https://www.scientificamerican.com/article/race-is-a-social-construct-scientists-argue/ https://www.scientificamerican.com/article/race-is-a-social-... [2] https://en.wikipedia.org/wiki/Social_constructionism https://en.wikipedia.org/wiki/Social_constructionism [3] https://www.theatlantic.com/national/archive/2013/05/what-we-mean-when-we-say-race-is-a-social-construct/275872/ https://www.theatlantic.com/national/archive/2013/05/what-we... [4] https://www.psychologytoday.com/us/blog/without-prejudice/201612/race-social-construction https://www.psychologytoday.com/us/blog/without-prejudice/20...
asmithmd1 8y ago
For US income taxes the only amount of your taxes that you can direct is $3 for the presidential election fund. Why not expand this and let you pick from a dozen or so categories?
- kevin_thibedeau 8y ago
  Then people would be gravely offended by who was and wasn't on the list of choices.
  - Brockenstein 8y ago
    Well they're already greatly offended by taxes and the idea that civilization requires money to run... I think outside of being offended, you'd just have a hard to getting any agreements on what would qualify.
    - asah 8y ago
      I'd love to see a large scale survey where people allocate their taxes, and see what the allocation actually comes to! The HN crowd might over-allocate $1000s per person to NSF, NIH and NASA and short Social Security while 100+M people contribute $0 to science, but depend on SS to survive. We might end up with the same budget but people feeling more in control. We'd also see large scale advertising which is actually a good thing: ads are pretty cheap/efficient, make people feel better about their government and society, and employ an army of creative people. I imagine you wouldn't see branches of government running negative ads against each other - it would be more like the feel-good military recruiting ads today. Sorry if this sounds utopian, I've had a rough week (in addition to everybody's rough week) and need something to feel good about.
      - jfim 8y ago
        That would end up in a popularity contest between agencies, which I doubt is desirable, especially considering some of those disliked agencies [1] are actually useful (like the FDA and the department of education). And hang in there, the weekend is almost there. :-) [1] https://www.google.com/amp/s/www.washingtonexaminer.com/which-federal-agencies-do-americans-hate-most%3f_amp=true https://www.google.com/amp/s/www.washingtonexaminer.com/whic...
narag 8y ago
...around half of my taxes go to the poorer regions... And then the cause of the problem is presented as if it were the solution.
walterstucco 8y ago
I live in northern Italy, but I am from Rome, "Roma Roma" as we say in Italy This is simply not true Half of your taxes pay for Formigoni that takes bribes from healthcare in Lombardy Pointing out what's wrong in our country is good, blindly believing in black propaganda is not.
ai_ia 8y ago
On a side note, is there any system that exists where citizen can decide to a greater autonomy how there tax money is spent?
- gph 8y ago
  Libertarianism. I hear they are testing it out in Oregon. /s
  - mmirate 8y ago
    Replace "Oregon" by "New Hampshire", and you can say the words with pride instead of sarcasm.
    - int_19h 8y ago
      Still going to be sarcasm, sorry. How many of those who pledged to move have actually moved?
      - mmirate 8y ago
        Sorry, I don't have those numbers on-hand. What I do have on-hand is that NH has a higher median income than any other nation in the world (incl Luxembourg), despite being a net-payer of federal taxes. (Source: https://mises.org/wire/if-sweden-and-germany-became-us-states-they-would-be-among-poorest-states https://mises.org/wire/if-sweden-and-germany-became-us-state...)
        int_19h 8y ago
        I seriously doubt it has anything to do with the FSP. Of course, the median income metric is not the end-all be-all, either. For example, it ignores all the state-provided benefits that those high taxes pay for.
        danso 8y ago
        It's true that NH has traditionally been in the top-tier of states when it comes to median household income. In the 2016 ACS, it appears to have reached the top: https://www.pressherald.com/2017/09/13/the-state-with-highest-median-income-is-new-hampshire/ https://www.pressherald.com/2017/09/13/the-state-with-highes... But its lead is not an overwhelming one. Connecticut's 2016 median hh income was just ~$350 less. According to the the previous ACS in 2015, NH was number 8. And 6 of the top 7 were traditionally blue states. https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_income https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ... - 1. Maryland - 2. DC - 3. Hawaii - 4. Alaska - 5. New Jersey - 6. Connecticut - 7. Massachusetts
mann1x 8y ago
Amazingly you keep living under your dome of ignorance, blind to the obvious, spreading lies around. Your half taxes are stolen by criminals all around Italy, most of them are your neighbors in the North. Going around on a Ferrari, wearing Rolex and spending hundreds of Euro for an aperitivo. Your money too. That money it's routed to the South and mostly goes back to "hard working" companies from the North. In inflated or just fake invoices, overpriced goods. Most of the successful companies in the South are just plain mafia or subdued by them. Who doesn't get burned to the ground. Honest people in the South they have to either work for them for half your salary or just spread around the world. That's why most of Italian ex-pats are form the South: they work twice hard as you, earn less and are forced to a very uneasy self-imposed exile. You should take conscience how lucky you are. There's the same amount of good & bad people all around Italy: those in the North are just lucky because the South is more beautiful and rich, perfect prey to ransack. Thanks to the populist far-right extremists of the Lega nothing will change anytime soon. They profited on this kind of ignorance to take power, accusing "Romans" to steal your money. While spreading hate, racism, xenophobia and homophobia they took advantage of the system they promised were fighting and stole hundreds of millions. That's their chunk of your half taxes.
- dang 8y ago
  This post breaks the HN guidelines. Personal attacks, as well as political and national (or whatever this) flamewar, will get you banned here. Please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and don't post like this to HN.

kposehn 8y ago

This is absolutely fascinating, and (while Japanese culture has a number of key differences to the US that make it work) something that we can learn a lot from.

eigenspace 8y ago

That was a fascinating read! I love when things like this happen and some new emergent behaviour appears that was unexpected. This did end up much better than most perverse incentive situations. In fact, I'm not even sure I'd call this a perverse incentive but maybe I'm musinderstanding the definition.

gwern 8y ago
I consider it perverse because it incurs overhead in making the payments (eg if you send a town $100, get back a gift card for $100, and cash it for $97, that's $3 burned for nothing whatsoever than if they could've just transferred $100 into your bank account or not taxed it in the first place), deadweight loss in gifts (you don't value those hometown meibutsu at their market value to other people), overhead from the incentivized marketing competition (ad campaigns aren't free), and of course, the existence of a competition at all means that the hometown which incurred the expenses of rearing/educating you in the first place probably isn't going to get your tax revenue because they don't offer anime pineapple rewards or whatever is hip at the moment. None of that was intended nor is it useful. Interesting & amusing, but not useful. (And anyway, I had to title it something. 'Japan's Hometown Tax' makes it sound unutterably boring & technical, when the second-order effects are what's interesting.)
- avar 8y ago
  It's only perverse and pointlessly burning money if you exclusively look at it from an economics perspective, but most countries have some sort of highly politicized redistribution mechanism, so it's also a sociological and political question. I.e. you can look at it like an accountant and consider it a 3¢ loss for every $1, or you could consider that perhaps a system like this increases societal goodwill towards redistributing money to poorer parts of Japan. If it wasn't for that goodwill would you have $1 to work with in the first place? Or would political opposition to the redistribution already have cut that down to 90¢?
  - gwern 8y ago
    I struggle to see what beneficial social effects there are from most people cynically ticking a box on a website to get half back as a gift card they immediately sell for 97% face value. The original intent of the tax program in compensating rural areas, yes; what it has morphed into, no.

overdrivetg 8y ago

Do you think some kind of bidding or voting on the maximum donation amounts involved would make sense? Ie, cities each vote on what they think a "proper" maximum reward would be, then set it at the average. Relatedly, I'm not sure why a supermajority of cities agreeing to limit gifts would be generally in their best interests: 1. Lower status ("less popular") cities gain more donations via rewards 2. I would guess status/popularity probably follows a power curve 3. Therefore the long tail cities are able to flatten the distribution curve by bidding their way up 4. If they went back to a level playing field, they would drop back down the curve, likely losing the (smaller but nonzero) overall financial boost gained after bidding Basically: if I am a small city with few "natural" benefactors, I can bid my way up the curve (admittedly depending on the elasticity of "demand") such that I gain more from more donations than I lose in larger rewards. ...unless the market today just drives everyone to offer the maximum reward? Super interesting though, thank you for sharing this!

pessimizer 8y ago

This sounds like a good way to redistribute funds, but at the cost of lowering total revenue. If taxes are raised to make up for the often hometown-branded but often highly liquid gifts, it will be fine, but 1) I imagine raising taxes is going to be highly sticky, and 2) it's a flat, regressive tax, making it either forced gift-buying for people who probably shouldn't be buying themselves gifts or a government subsidy for the voucher-brokers. If you're a Japanese politician, you should probably invest heavily in voucher-brokers, then lobby for a rise in the tax.

gowld 8y ago
I'd expect that the end-state would be that tax rates go up to maintain desired revenue levels, the localities all bid up to the max amount of refund, and the whole system works not quite as well as the day before the system was invented -- except that a bunch of works gets expended on the useless competition for funds, and the money distribution gets unfairly balanced based on whichever locality has more clever marketing. This is exactly counter to the concept government -- a system that should be run as a monopoly ends up being full of waste due to competition with no net improvement.
- pessimizer 8y ago
  > the money distribution gets unfairly balanced based on whichever locality has more clever marketing. You might be able to mostly solve this by automatically registering people to a default hometown, and making it very annoying to change your registration. That latter part might be doable by simply allowing the municipalities to administrate their own hometown lists, so you'd have to contact your current hometown to transfer your registration to a your new hometown. They'd be economically motivated to make it as difficult as canceling a gym membership.
csours 8y ago
Liquid gifts you say? Well it just so happens my 'hometown' is Loretto, Kentucky. https://www.google.com/maps/dir//Maker's+Mark+Distillery,+3350+Burks+Spring+Rd,+Loretto,+KY+40037/ https://www.google.com/maps/dir//Maker's+Mark+Distillery,+33...

iscrewyou 8y ago

What a fascinating concept. I would love to donate to my hometown and just get some raisins back as a gift once in a while. But I could really see the idea struggling through city council meetings because of the “well you could just donate to the city and then just buy some raisins on the side?”. And that’s a testament to how ideas can evolve overtime and be accepted which otherwise would never be considered.

ajmurmann 8y ago
I think the "but some raisins in the side" thing wouldn't happen, since it's a opt-in system and it's in the interest of the town to keep the relationship up and stay on your mind.

noisy_boy 8y ago

Very interesting. A scenario came to mind - a city sends back a local delicacy. Then it notices that the number of donators is increasing. Looks further into it and finds that the delicacy is very popular. Now it has identified a product that it can independently promote and the city can earn more revenue. So many possibilities :)

brazzy 8y ago
Local food delicacies are a major industry in Japan due to the formalized culture of travel souvenirs, and it's pretty much guaranteed that anything that could conceivably be promoted as one, already is.
- gorpomon 8y ago
  On my first visit to Japan I went up to Takayama. I had never heard of Hida beef before that visit, but now I've eaten enough for a lifetime.

resoluteteeth 8y ago

Couching this in terms of Japanese culture is unhelpful in my opinion. The return gifts probably wouldn't exist in the first place elsewhere, but allowing them is simply a blatant loophole that various local governments have cynically abused to increase their revenue and this is something that would happen in any country. The biggest problem is that some local governments are apparently giving return gifts that have a value that's higher than the 2000 yen part of the hometown tax that isn't tax deductible, which means that by opting in to donating to these local governments you do slightly better than if you didn't donate money in the first place. These governments are obviously trying to get people with absolutely no local connection to send money purely for the gifts. One option would be to set a limit on the value of the gifts, but there's absolutely zero reason to allow the return gifts in the first place. The whole reason for the first 2000 yen not being tax deductible is this is something you are only supposed to do if you seriously want your money to go to a local government, and allowing non-taxed return gifts defeats the intention of how the system is set up. Having tax money go back into return gifts is also ridiculously inefficient. Unfortunately, based on the way the government is set up, rural votes have disproportionate power, and for this reason the LDP has a tendency to pander to rural interests, so they probably have no interest in eliminating the gifts entirely. However, at least they recently announced that they are looking into introducing legislation to limit the value of gifts (and ban the worst abusers from participating entirely) in the next regular session of the Diet.

usaar333 8y ago
> . The whole reason for the first 2000 yen not being tax deductible is this is something you are only supposed to do if you seriously want your money to go to a local government, and allowing non-taxed return gifts defeats the intention of how the system is set up I definitely found it strange Japan is allowing the local governments to gift 50% back. In the US, legally any portion of a charitable contribution you get back in personal benefit (e.g. an expensive banquet) is not tax deductible.
- wyattpeak 8y ago
  It would probably be instructive to know how actual charitable donations are handled in Japan. I have no idea, but in a highly reciprocal culture I could well imagine that effectively punishing reciprocation in that way would be a political non-starter.

CodesInChaos 8y ago

Interesting how in some contexts kickback is illegal fraud/corruption, while here the government of a developed democratic country openly engages it. https://en.wikipedia.org/wiki/Kickback_(bribery) https://en.wikipedia.org/wiki/Kickback_(bribery)

resoluteteeth 8y ago
It's also interesting in the context of how strict Japan's rules for election campaigns are. For example, a few years ago Justice Minister Midori Matsushima got in trouble for distributing essentially worthless paper fans since they were considered gifts, whereas paper pamphlets would have been okay, and she had to resign as minister. https://www.dailymail.co.uk/wires/ap/article-2799975/Japans-justice-minister-undone-cheap-paper-fan.html https://www.dailymail.co.uk/wires/ap/article-2799975/Japans-...
- kbrosnan 8y ago
  It is about reach, a leaflet would reach one person. That person might talk to a person or two about the information in the leaflet. One person with a fan could be seen by many thousands of people on their daily commute.
  - resoluteteeth 8y ago
    That might be a reasonable basis for a rule in theory, but it's not the issue in this case under Japanese election law. Something that has any value and counts as a gift and therefore isn't allowed, even if the value is extremely small. There are other various other rules about campaign activity though (where/when it can be performed).

make3 8y ago

Won't this degenerate to a pure bidding war, with people sending their money to the town that gives them the largest fraction of cash equivalent returns, transforming into only a tax reduction ? like, cities will bid to something like ninety-something% cash equivalent, to the very limit of their margin because it's winner takes all.

vxNsr 8y ago
If you got to the end of the article you'd know that's exactly what happened. The central gov stepped in and limited the quid pro quo gifts to 50% of the donation amount. so now that's become the defacto standard for the return "gift".

chadlavi 8y ago

this is really deeply fascinating!

rb808 8y ago

The American system (& Japanese?) where schools are mostly funded by local taxes is a root cause of inequality, poverty and unfairness in the USA. Schools in Europe and Australia are funded by centralized government more evenly so doesn't have this problem and dont need this donate to a region system the article talks about. I think its much fairer.

ekianjo 8y ago
> Schools in Europe and Australia are funded by centralized government This has the other problem that in Europe, governments write all the education program to the letter and this leads to complete brainwashing of the kids or silly educational policies (like completely changing how kids learn how to read, which led to about half a generation of kids with very poor reading/orthographic skills in France just to name one disaster), so pick your own poison.
- mschuetz 8y ago
  > leads to complete brainwashing of the kids Says the one (I presume) from the country that recites the pledge of allegiance in school.
  - gknoy 8y ago
    I find that saying the pledge of allegiance (when I visit my kids' schools for things) is an interesting affair. It's an opportunity to reflect on both the ideal of the Republic, and the ways / extent that the state of the Union has changed over time. I find it poignant that I am pledging allegiance to the Flag and the Republic, rather than to the political party in charge, or to the federal government, etc. Are the differences meaningful? Why? What can I be doing better as a citizen? These are all questions that can run through my mind when saying the pledge with mindfulness. You're right, there's probably an element of brainwashing there. However, one can also use it as an opportunity to meditate on civic duty. :)
- Arnt 8y ago
  This is HN not facebook. People here are used to reading metrics, so you can elaborate. Show numbers instead of saying "very poor". Link to graphs.

ElBarto 8y ago

Considering the ups and downs of the Japanese economy this can also be seen as a subsidy to boost consumption and economic activity.

village-idiot 8y ago

Classic case of "Tax Systems are Really Hard to Design" in action.

dsfyu404ed 8y ago

The system described sounds awesome. As someone in the US I would love to pay a portion of my taxes to a state/town that isn't ruled by corrupt and inept busybodies who's politics I disagree with. Getting a some % back or having my corrupt dump of a state match the donation would just be icing on the cake. 10% losses due to middle men doesn't sound that bad when it gets you the freedom to choose where your tax dollars are spent.

sonnyblarney 8y ago

It's a wonderful idea in principle. I love the fact that regions respond with simple, relevant gifts. I wonder if would be more appropriate if: a) you could only give to 'where you went to school' and b) regions could only respond with a nominal, non-cash gift, like a fruit, flower, or some culturally relevant thing. It would close the loophole, provide for meaningful tax redistribution and encourage legitimate cultural contact between regions and the mega-centre. Of course trying to get big business out of Tokyo might be an opportunity as well, though that's a hard thing. Creating industrial clusters is hard, and regions fight over it.

aurelianito 8y ago

The mechanism used in Japan to compensate for the brain-drain should be used worldwide.

vvillena 8y ago

I really like the basic idea of being able to choose a town or region where an alloted part of one's taxes will go. I live outside my hometown for business reasons, so I'm paying taxes on the most well-funded region in my country. Even if the government redistributes tax money, I'd love to have a small say in where my money goes.

dorfsmay 8y ago

There's an equivalent issue with city with large suburbs: companies in the city core pay a lot of local taxes that stays within the city, but living in the city is too expensive for 80% of the employees who live in the suburbs, which cannot benefit from local taxes paid by the big companies.

paxy 8y ago
The problem usually is that homeowners in the suburbs vote to keep their own property taxes extremely low, and then blame corporations when there isn't enough money to run things.

deleted 8y ago

[deleted]

Balgair 8y ago

I LOVE this idea! Here in the US, it could really help out rural communities. The best part is that it is 'free' to everyone; you've already paid the taxes. Small communities could, and do, organize festivals based on local culture: Trout fishing in the summer, Ice festivals in the winter, Duck races in the spring, etc. They get people interested in some aspect of the community, be it a festival, music, the climate, foods, textiles, history, etc. Either way, the community sends stuff out or brings people into itself for 'free' as the taxes have already been paid. This incentivizes these small communities to plan for the festivals, to clean up the streets, to pay people to make it look nice, get a bunch of bunting ready for the 'homesick' tourists that they sent AirBNB vouchers out to. People come in, spend money at the diners and in the shops, at the mechanic's when a tire goes flat. There are knock-on effects that the community feels. Or it incentivizes them to get better at food/textile/goods production. Maybe they make a mean steamed-ham. They get better at curing and steaming the hams, they find a niche in the market they didn't know they had, they hire more workers to fill the niche. City-slickers get some steamed-hams, realize that they don't have any rolls to eat them with, and go out and buy some. Again, knock-on effects. For communities that are very small, they could run mini-lotteries, like one during a Wednesday night bowling league. You sign up, they draw a name out of a hat, you get 10% of everyone's tax money that entered (something less than the 30% that the community would have sent out). Communities that don't participate still receive taxes as before. Some that choose to spend these taxes are taking a chance, true. But, I feel that this 'priming of the pump' is fantastic idea. It gets people moving about, making things, buying meals and plane tickets.

gph 8y ago
Did you read the entire article? It's not really 'free to everyone', it's not like it's magic money. It's more like a transfer of tax revenue from Tokyo to rural communities, with a bit of a kickback to the tax payers. And while your vision sounds nice, the end of the article made it sound more like it's become a race to the bottom with most rural towns offering the maximum amount allowed in gift vouchers which people resell for cash. So it's mostly just a convoluted tax distribution/credit system in a lot of ways. And as much as it would be nice to have something like what you wrote, it would be near impossible to set out rules such that it didn't become another cynical race to maximize profits by attracting 'donors'. Even if you outlawed gift cards, there's always going to be some good/commodity a community can offer that will hold a liquidable cash value.

paxy 8y ago

> A few rounds of vigorous capitalism later I love this line

_0nac 8y ago

I see a lot of moaning about inefficiency here, but here's a point of comparison. During the Bubble years in the late eighties, when many rural areas were feeling left out, there was a scheme to give basically every municipality in Japan a large lump sum of money ($10m?), no strings attached, except that it had to be used for building something new. This, as you might guess, was an incredible waste of money. Many podunk towns built flashy "multi-purpose halls" (多目的ホール) perfect for all those symphony orchestras just dying to perform in the middle of nowhere. More memorably, the town of Utazu, Kagawa purchased a solid gold toilet...! http://english.cri.cn/6909/2010/09/09/1901s593626.htm http://english.cri.cn/6909/2010/09/09/1901s593626.htm https://www.emporis.com/buildings/191596/gold-tower-utazu-japan https://www.emporis.com/buildings/191596/gold-tower-utazu-ja...

Pxtl 8y ago

Anybody else figure out the endgame when they saw the beginning? "Oh crap, the hometowns just kick back a percentage to the taxpayer and suddenly Tokyo is bankrupt - as the hometowns outbid each other in a race to the bottom, eventually they lose too and it ends just being an expensive and complicated tax cut". Reality turned out even worse, with brokers skimming off a percentage. I suppose it's fair. In Japan, registering yourself in Delaware for bullcrap reasons isn't just for corporations anymore!

techman9 8y ago
Can you explain a bit more more about why you believe Delaware is the proffered place to register a corporation?
- Pxtl 8y ago
  https://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html https://www.nytimes.com/2012/07/01/business/how-delaware-thr...

WalterBright 8y ago

> it’s like running an e-commerce business with the special wrinkle that your customers are entirely price insensitive. It's obviously very economically inefficient. The larger this thing grows, the more it will distort and hurt the economy.

an4rchy 8y ago

Super interesting policy! I was thinking about why Tokyo doesn't do the same and reciprocate, thereby competing with the smaller towns. I do realize that Tokyo/(any other big city) wouldn't want to do this till the number of people opting in hits a threshold within their city but maybe that is the equilibrium point. Does anyone have any insight into that?

ajuc 8y ago

Poland has something similar on regional (not city) level, it's called Janosikowe (from Janosik - a Polish Robin Hood), and it's much less flavorful than the Japanese thing, it's just a percentage of local taxes paid by the richest regions to the poorest regions.

mjevans 8y ago

Taxes automatically withheld by employers at the correct rate. Yes please, this is how it should work for most of the population without special issues.