Absent aid, few US cities will be able to avoid austerity
citymonitor.ai
citymonitor.ai
After some digging, I realized that just 10% of the population pays about 71-72% of the taxes.
If half of that 10% of the population leaves, the city will have 1/3rd less tax revenue (it will have less than 65% of the current revenue). Also, the city will be limited on what it can tax, as if it raises the taxes more, even more people will leave for low tax states and turn it into a death spiral. The only way to get out of the situation is to have help federally.
Meanwhile it will have to cut services drastically.... from trash collection, social services, schools, etc... Apart from the slow trash decay, I think the first shock from some of the folks will be when MTA is forced to raise fares to $4 or $5 (now it is $2.75).
As for those 'let the gentrifiers leave' populist folks, Sure, rents will go down by 15-20% but a lot of the folks will be jobless soon, and manny other things will get more expensive.
Keep in mind you're talking about a local municipality which is going to receive a large chunk of its revenue from property taxes, fees, sales tax etc. From https://www.ibo.nyc.ny.us/iboreports/understandingthebudget....
The breakdown is:
29% Property Tax
17% State Grants
13% Personal Income Tax
10% Federal Grants
8% General Sales Tax
8% Fees and Fines (Non-Tax)
7% Business Income Tax
4% RE Taxes
4% Other Taxes
Edit: the pothole was supposed to be a metaphor for something the city does but could do a lot less of without people actually being badly affected.
When money like that is available to a city, you end up with infrastructure projects of the scale NYC has, the ability to tell your state "thanks but no thanks", Oh, and police departments with intelligence units that outstrip the capabilities of the intelligence apparatus in most Asian and South American nations.
The average american has no frame of reference for the kind of wealth at the disposal of NYC. I say, let them fix all the potholes. Regular people may as well get something out of it.
From (biased but presumably factual): https://www.empirecenter.org/publications/nycs-high-income-t...
Edit: just trying to add info, not bias the conversation! Maybe also relevant: https://www.visualcapitalist.com/3d-map-the-u-s-cities-with-...
And if I'm not mistaken, the city still gets that money as long as the job is located there anyways.
It also stands to reason that other tax receipts will go down if people move away e.g. rents go down -> propery values assessed downwards -> taxes decrease.
Raising taxes does not necessarily increase tax revenue. Is the last guy on the sinking ship going to pick up the tab for everyone?
It actually looks even worse in Europe - not only is the continent hugely economically diverse in development and in governance structure (some are much less or more corrupt and more or less democratic than others) but the free movement and free trade has functionally taken every nations economic sovereignty. Its the only point on which I can agree with Brexiteers on because the EU is much less democratic an institution than a lot of its constituent national governments are.
Ultimately final power comes down to the purse. The EU uses the Euro to control economic policy across the continent, the US Federal Reserve uses the USD to control the US economy. There is nothing you can do as any regional or local power to oppose the will of those higher institutions. Especially if you work in the peoples interests, because then you have the joint problem of attracting the poor and downtrodden because you are trying to uplift your working class while losing the favor of the capital you would depend on to generate the revenues to afford anything.
Its by design, to be fair.
Their book is a good, quick overview of what they're about. It's not perfect, but it has some ideas worth considering.
Low service state rolls costs down to counties and cities and then kneecaps them.
Low service state makes cities and towns who want to be high service pay their own way.
Yeah the quote is pretty bad if you're on the business end of his proposed policies but whether or not those policies are good or bad totally depends on your ideology.
But they already do. The difference is they get "back" less proportionally. Not a bad thing btw, that's the nature of progressive taxation!
In Texas, as in many states, municipalities are severely restricted in the types and amounts of taxes they can levy. And, especially in Texas (considering the fight over school funding), the propensity is to further restrict the types and amounts of taxes, not expand them. Most forms of business tax are flatly outlawed. And if a city tries to impose a fee of some sort, the legislature will quickly get around to cutting off that authority. Property tax limits are severely restricted, same for sales tax.
For example, transit districts in Texas may not exceed a 1% sales tax and that's only able to be levied in cities that have not used all of their 2% "local option" sales tax cap. Most cities in Texas, levy 1% of the sales tax cap for "general purposes" and then another 1% for "economic development," which should be read as basically giveaways of public money to induce private businesses to locate in those cities. Cities that can't or don't levy economic development taxes are seen as at a disadvantage to the cities with that pot of money.
So it's far more complex than "well, high-service cities should just tax more to pay for more."
--Saint Thomas Aquinas
— Gore Vidal
Doesn't the federal government owe at least that much to people??
Clearly, the US is suffering from the Dutch Disease, except instead of oil it's the dollar that is creating the problem.
So just let the government hire everybody. Build lots of stuff, housing and factories and infrastructure. Print the dollars to pay for all of it, until the dollar collapses. American labor is now cheap again, so those factories can produce at internationally competitive cost.
This is similar to how China does it. The key is that you can't devalue the currency if you have a service economy that relies on cheap imports, but that's exactly the way the US is headed right now.
The article is pointing out that loss in revenue becomes a death-spiral that causes a loss of jobs and a further reduction in revenues. And that cities are largely powerless to stop it because some state government officials, well, they are assholes who welcome the ensuing chaos.
If anything, it's merely a warning of what people in much of America should expect in the coming years. If you live in a flyover city, it's probably going to look a lot like Flint in the coming decade.
The new deal is "Don't be poor"
Lot of countries around the world intentionally debase their currency to stay competitive. It's a valid monetary instrument. In the short term, currency debasement would lower the standard of living of Americans, but it would make their labor competitive.
If a suburb or ex-urb's liabilities exceed their assets, weren't they already broke? I'm trying to understand because I don't know a lot about this whole issue. But unless they charge people a whole lot in taxes to live in those areas, I'm not seeing how those places weren't poor in reality from the start? It seems to me those suburbs just managed to have other people pay for their infrastructure and services for so long that they never realized they were broke. But maybe there is some other source of money that they get from somewhere?
Government's job is to provide for its constituents as prescribed by said constituents, not to collect taxes, sit on cash or build things. Being bankrupt or not doesn't really matter any more than it affects the government's ability to carry out the will of the people and if the will of the people is to do nothing then bankruptcy probably won't be much of an impediment.
Is it like some unwritten rule that the price we pay right now is exactly how much we need to pay for the quality of service we are getting? I know that countries like Taiwan have a 4-10x lower level of income as places like New York City and have the same quality of living. Can't we make the argument, in times of prosperity we all paid ourselves a little too much and now we just need to pay ourselves less? Companies do that all the time - they cut the fat in hard times. Why can't cities and societies do that as well?
Cutting the fat isn't letting poor people starve on the streets. It's an admittance that we feasted during the times of boom, and at that we can't feast at the same level in times of famine, from all levels of society.
Instead, the narrative is always we need to raise taxes, like our over-indulgence, inflated standard of living in times of abundance, and padding our pockets is some sacred right that can never be questioned.
Psst: Your Scottsman isn't wearing pants.
- trillion dollar wars, and in general, multi-trillion dollar military expenditure
- subsidized private health insurance (as opposed to a more streamlined/wholesale universal healthcare plan)
- social security fund that leaks value over time
- massively bailed out banks
- widespread quantitative easing
In my humble and probably misguided understanding of Keynesian economics, you would want the government to fund e.g. a federal jobs guarantee during a recession.
Like, if you had a recession, pay one set of people to dig a hole, and another set of people to fill it up again, because then at least money would still propagate throughout the economy.
But I'm not certain that these huge expenditures (above) really did much to help worker or city solvency. Basically unless you are one of the government's top clients, don't expect it to pick up a check pad.
I guess I can sort of see how you're saying that it may have been Keynesian-esque for all these various industries but it's certainly not that Keynesian for the little guy.