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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 provi
by 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 agoMaybe 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 agoWhat 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 agoI 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 agoAre 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.
- db48x 3y agoI am equally indifferent to NYC bonds under either taxation scheme. From a national perspective, the bond prices of one particular city are irrelevant. It’s not even clear to me that a change in bond prices is necessarily a good way to measure whether a particular type of taxation is good or not. Even if a new tax scheme caused NYC tax revenue to drop enough to affect bond prices, surely that would be offset by increasing revenues elsewhere and thus increasing bond prices for other cities. After all, the businesses are simply moving their headquarters around. McDonald’s isn’t going to stop selling burgers in Manhattan, right? Likewise pensions. My personal opinion is that anyone accepting a pension instead of better pay is not really doing themselves a favor; they’re taking on extra risk that the politicians won’t raid the pension fund or otherwise mismanage the city. I would rather just own the underlying securities myself, and eliminate the extra steps.