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> How is it not advantageous for a company to then reduce its tax burden by moving to a place with lower land taxes? Forget all the numbers and try to answer t

> How is it not advantageous for a company to then reduce its tax burden by moving to a place with lower land taxes? Forget all the numbers and try to answer the question: Why doesn't JP Morgan move their headquarters to Rawlins Wyoming?

keiferski 3y ago
I think I already answered this: because their taxes would basically be the same. They won’t be avoiding 20-30% in taxes by moving there. And yes, of course there’s the factor of New York’s value as a cultural hotspot, base of workers, etc. but as I said, the growth of remote work will probably have a pretty serious effect on this. We’re already seeing panic signals from city governments trying to get people to stop working remotely. I don’t think it’s inconceivable that the JP Morgan of 2040 would have a predominately remote workforce and have no issues moving their headquarters to Rawlins if it means they avoid a massive land value tax. It doesn’t really need to be that extreme of an example, though: there are plenty of smaller cities in the NYC metro area that are more attractive and fulfill the same role as a low-tax zone (if taxes are based on land values.)
- db48x 3y ago
  Why would that be a problem? The tax revenue of Manhattan goes down because JP Morgan is no longer headquartered there, but Manhattan also doesn’t have to provide as many services. All of those employees who used to live in Manhattan needed roads to drive on and police patrols and tree trimming and whatever else the city of Manhattan does. That’s a lot of money that Manhattan saves by not having as many people living there. Now all of those people are working remotely, living wherever they want to live, and are no longer forced to live in Manhattan. They no longer have to commute, so they're not adding traffic at all. They still need services, but they’re paying property taxes in whatever place they live in, so those are still paid for. In fact, the “headquarters” is really just the CEO’s house, because now _everyone_ is working remotely. JP Morgan still needs bank branches all over the place, and some of those are in Manhattan. JP Morgan must pay the land–value tax for the land that those branches occupy, and that money pays for the city services required by the branches. They’ll still have the same number of branches before and after the move, so that won’t change. JP Morgan still needs datacenters. The largest ones will be located where the land value is the lowest, of course. However, it will still be necessary to interconnect with multiple backbones, and the best place to do that is in the city where many companies are very close to each other. That won't change either. I don't see how this would be a negative for anybody. People who want to live in a dense city still can. Businesses who want to operate in a dense city with lots of nearby customers will still do so, even if the land value taxes are higher; the revenue will be higher as well so it will be worth it.
  - throwawa14223 3y ago
    Maybe I’m thinking about this wrong, but wouldn’t it incentivize people to try as hard as possible not to live in the same district as people who need redistributive government services?
    - db48x 3y ago
      What do districts have to do with it?
  - sokoloff 3y ago
    > I don't see how this would be a negative for anybody. I think it would be a large negative for NYC bond-holders and NYC pension holders.
    - db48x 3y ago
      I don’t see how. Remember, if JP Morgan moved their HQ out of Manhattan, that leaves room for others to move in. Maybe some other business would profit more than JP Morgan did from having an HQ in Manhattan, and would pay the higher land–value tax that comes with it. Or maybe more people would move in instead, looking for life in a busy urban area. Of course any random change could result in NYC dwindling away and not being able to pay it’s bond obligations any more. We don’t have to posit a radical change in how taxes are collected to imagine that, we just have to look at Detroit. The whole point of a bond is that when you purchase one you are betting that the city will still exist and still be able to pay the interest on the bond. That’s never guaranteed though. And surely the pension holders would be fine, since those obligations will be funded from investments NYC has made whose performance is independent of its own revenue.
      - sokoloff 3y ago
        Are you equally eager to invest your life savings in a 2053 NYC bond under both of the following scenarios: 1. NYC funding sources will remain as they are today, or 2. NYC will transition entirely by 2038 to a land value tax? To the extent and for the entirely rational reasons that you prefer #1, that's the negative to NYC bondholders. > surely the pension holders would be fine, since those obligations will be funded from investments NYC has made Assuming the pension was funded to 100% of projected obligations, this would be true. That is not the case; it's around 4/5ths funded.

keiferski 3y ago

I think I already answered this: because their taxes would basically be the same. They won’t be avoiding 20-30% in taxes by moving there. And yes, of course there’s the factor of New York’s value as a cultural hotspot, base of workers, etc. but as I said, the growth of remote work will probably have a pretty serious effect on this. We’re already seeing panic signals from city governments trying to get people to stop working remotely. I don’t think it’s inconceivable that the JP Morgan of 2040 would have a predominately remote workforce and have no issues moving their headquarters to Rawlins if it means they avoid a massive land value tax. It doesn’t really need to be that extreme of an example, though: there are plenty of smaller cities in the NYC metro area that are more attractive and fulfill the same role as a low-tax zone (if taxes are based on land values.)

db48x 3y ago
Why would that be a problem? The tax revenue of Manhattan goes down because JP Morgan is no longer headquartered there, but Manhattan also doesn’t have to provide as many services. All of those employees who used to live in Manhattan needed roads to drive on and police patrols and tree trimming and whatever else the city of Manhattan does. That’s a lot of money that Manhattan saves by not having as many people living there. Now all of those people are working remotely, living wherever they want to live, and are no longer forced to live in Manhattan. They no longer have to commute, so they're not adding traffic at all. They still need services, but they’re paying property taxes in whatever place they live in, so those are still paid for. In fact, the “headquarters” is really just the CEO’s house, because now _everyone_ is working remotely. JP Morgan still needs bank branches all over the place, and some of those are in Manhattan. JP Morgan must pay the land–value tax for the land that those branches occupy, and that money pays for the city services required by the branches. They’ll still have the same number of branches before and after the move, so that won’t change. JP Morgan still needs datacenters. The largest ones will be located where the land value is the lowest, of course. However, it will still be necessary to interconnect with multiple backbones, and the best place to do that is in the city where many companies are very close to each other. That won't change either. I don't see how this would be a negative for anybody. People who want to live in a dense city still can. Businesses who want to operate in a dense city with lots of nearby customers will still do so, even if the land value taxes are higher; the revenue will be higher as well so it will be worth it.
- throwawa14223 3y ago
  Maybe I’m thinking about this wrong, but wouldn’t it incentivize people to try as hard as possible not to live in the same district as people who need redistributive government services?
  - db48x 3y ago
    What do districts have to do with it?
- sokoloff 3y ago
  > I don't see how this would be a negative for anybody. I think it would be a large negative for NYC bond-holders and NYC pension holders.
  - db48x 3y ago
    I don’t see how. Remember, if JP Morgan moved their HQ out of Manhattan, that leaves room for others to move in. Maybe some other business would profit more than JP Morgan did from having an HQ in Manhattan, and would pay the higher land–value tax that comes with it. Or maybe more people would move in instead, looking for life in a busy urban area. Of course any random change could result in NYC dwindling away and not being able to pay it’s bond obligations any more. We don’t have to posit a radical change in how taxes are collected to imagine that, we just have to look at Detroit. The whole point of a bond is that when you purchase one you are betting that the city will still exist and still be able to pay the interest on the bond. That’s never guaranteed though. And surely the pension holders would be fine, since those obligations will be funded from investments NYC has made whose performance is independent of its own revenue.
    - sokoloff 3y ago
      Are you equally eager to invest your life savings in a 2053 NYC bond under both of the following scenarios: 1. NYC funding sources will remain as they are today, or 2. NYC will transition entirely by 2038 to a land value tax? To the extent and for the entirely rational reasons that you prefer #1, that's the negative to NYC bondholders. > surely the pension holders would be fine, since those obligations will be funded from investments NYC has made Assuming the pension was funded to 100% of projected obligations, this would be true. That is not the case; it's around 4/5ths funded.