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>> Less government revenue is not inherently good or bad for the economy. Government revenue from non-distortionary sources are good for the economy, since the
by jljljl 12y ago
>> Less government revenue is not inherently good or bad for the economy.
Government revenue from non-distortionary sources are good for the economy, since they allow the government to provide public goods and services (those which the private sector does not provide effectively) without major distortions to supply or demand.
Hotel taxes, according to the author, do not seem to really impact demand for hotels and tourism, so they are non distortionary. If the government loses this source of income and has to, say, raise the income tax to provide the current level of public goods, that is bad for the economy.
>> One party "dodging" taxes does not automatically raise those on others.
Not automatically, but at some point the government needs to balance it's budget. So they either raise taxes on other sources (shifting the tax burden) or cut benefits/subsidies to other members of the economy (again, shifting the tax burden).
- frogpelt 12y agoA couple of points: 1. More government revenue does not always equal more community needs being met. Many times it is just the means for more fraud, waste, and abuse. 2. Also, to say that hotel taxes do not "seem to really impact demand" amounts to hand waving. Every cost affects demand to some degree or another. What about the impacts of paying a 15% hotel tax on other local businesses? A family may eat fast food instead of more upscale restaurant to offset the added expense. It's naive to pretend that any extra expense, whether it be a direct taxation or not, has no impact on demand in the marketplace.
- jljljl 12y ago1. It also, many times, does not mean more fraud, waste, and abuse. And if the government is providing a set of services, and their revenue is reduced, they will struggle to continue providing those services. 2. It is naive to assume that every additional tax has equal impact on the economy, or an equal distortionary effect on a consumer's supply and demand. A New York Hotel Tax of 15% may have less impact on the city's economy than raising the sales or income tax to cover the lost revenue.