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> These city governments needed revenue in order to operate. In fact, they needed to run a profit; that is, they needed their revenues to be at or above their e

> These city governments needed revenue in order to operate. In fact, they needed to run a profit; that is, they needed their revenues to be at or above their expenses, and that needed to continue indefinitely. What exactly is being argued here? That the local cities should be market players, and join in the income from growth they help stimulate? Local governments have a method for doing that, taxation. > Rome’s local government is funded largely by property taxes. ...... But for the Rome city government, tearing down multiple blocks of taxpaying properties—even if they were in terrible shape at the time—and replacing them with a tax-exempt property, under the guise of creating economic activity, is a really terrible transaction. Absolutely devastating. You're right, it would be a terrible transaction. They cannot be a market player in growth under their current structure. So as I see it, what you're arguing for is that Rome and Brainerd implement more transaction-based taxation. Which would be absolutely fine, as they then have a proper incentive to increase growth.

mywittyname 7y ago
It seems like less of an argument and more of a demonstration on how local governments are getting swindled by property developers. These developers make promises that all this money will be generated in the local economy if local governments agree to subsidize development. The agreements these developers make with the governments effectively ensure that most of that economic activity goes into their pockets, while ensuring that locals end up bearing the costs of maintaining the new facilities through increased property taxes. In essence, these deals get sold on the fact that they will bring $X million dollars into the local economy, but nobody realizes that 0.95*$X million dollars is going right back out again until it's too late. After a few years, the city coffers would be empty and maintenance costs of the infrastructure built for these developments would leave them insolvent. The tie back to the "free market" is a little less clear. But it seems to be to be a collection of anecdotes that "economic activity" doesn't magically flow into government coffers. The whole concept of cutting taxes to raise revenue is a joke and doesn't work. Small towns need to operate like a for profit business and take a hard look at the ROI for infrastructure investments, and this means collecting taxes.

mywittyname 7y ago

It seems like less of an argument and more of a demonstration on how local governments are getting swindled by property developers. These developers make promises that all this money will be generated in the local economy if local governments agree to subsidize development. The agreements these developers make with the governments effectively ensure that most of that economic activity goes into their pockets, while ensuring that locals end up bearing the costs of maintaining the new facilities through increased property taxes. In essence, these deals get sold on the fact that they will bring $X million dollars into the local economy, but nobody realizes that 0.95*$X million dollars is going right back out again until it's too late. After a few years, the city coffers would be empty and maintenance costs of the infrastructure built for these developments would leave them insolvent. The tie back to the "free market" is a little less clear. But it seems to be to be a collection of anecdotes that "economic activity" doesn't magically flow into government coffers. The whole concept of cutting taxes to raise revenue is a joke and doesn't work. Small towns need to operate like a for profit business and take a hard look at the ROI for infrastructure investments, and this means collecting taxes.