They have a $16B annual budget - https://budget.digital.mass.gov/govbudget/fy23/tax-expenditu...
The VAST majority of it comes from personal income tax, sales tax and corporate excise tax. Don't think Harvards $53B endowment is even relevant compared to that budget.
These institutions in Boston are centuries old. Boston has a very finite amount of land.
Allowing organizations with a lifespan in centuries the ability to buy and hold land without limit at no cost seems like a bad long term economic policy. What is the limiting factor on their growth?
Why? If you believe land should be owned at all, an institution with a lifespan in centuries seems more likely to use the land responsibly than one with shorter-term planning. (At the least they should be less likely to e.g. dump a bunch of toxic waste for others to clean up; better, they actually have an incentive to develop it in positive ways)
The big idea is that cities do need some money.
Locking away large portions of the city’s revenue generating assets (the land) indefinitely is going to reduce options for future city governments.
We don’t know what the funding challenges of the future will be. I hope they are small - with minimal tax increases. But I think cities should have some ability to safeguard their future revenue generation.
There is an argument to fairness. Everyone should be subject to the same tax rules. Even deserving causes like educating elite children.
Wait, that's amazing then.
It means that the city can get money from them completely for free with no downside.
They can just keep increasing it, they will keep paying, and all fitt budget issues will be solved forever!
Let's apply this argument to the use of a head tax. Everybody pays the same amount unconditionally with no way to avoid it, so it's free money with no downside?
No there is a downside to that.
The downside is one of redistributionary effect of having a flat tax. IE it negatively effects poor people more.
Thats a separate and unrelated downside to the other example.
This example isn't that though. The hypothetical that the other person gave, was that we could engage in taxing wealthy people and it would have zero deadweight loss (as in, those wealthy people apparently keep using the land exactly the same amount as they were before).
This would indeed be a free win, in economics.
Usually, the problem in economics of taxing wealthy people is that it puts a disincentive on productive work. This is called deadweight loss.
But in this other crazy hypothetical, we can get tax dollars infinitely for free from only wealthy people! Amazing!
To affect poor people more it would have to be affecting people. I thought it was free money because it doesn't put a disincentive on productive work?
> The hypothetical that the other person gave, was that we could engage in taxing wealthy people and it would have zero deadweight loss (as in, those wealthy people apparently keep using the land exactly the same amount as they were before).
They might keep using the land in the same way, but that doesn't tell you anything about how they were using the money.
They could intend to donate it to a charity or use it for some economically productive activity and the government may or may not be able to put it to a more productive use. US legislators' track record on monetary efficiency is rather humiliating.
There are 2 major and unrelated effects to taxes that are discussed in any basic economics 101 theory that I am happen to explain to you.
Sorry, I take a lot of basic econ theory for granted, even though I am sure most people haven't taken an introductory economics class. Thus leading to confusion.
effect 1: Changes to behavior/Disincentives on work. IE deadweight loss.
effect 2: the redistributionary effects of the taxes. IE does it harm poor people or not.
These are unrelated effects and are separate effects/downsides/benefits.
Do you understand how there can be 2 effects to a thing that happens, effect 1 which is bad, and that there can be a different effect 2 which is also bad in a different way?
You saying "Well what about this policy B that doesn't have downside number 1?!? Are you saying that there is nothing bad to policy B?!? Because you said that policy A was fine because it doesn't have downside 1? Therefore it must be that policy B is good because it also doesn't have downside 1."
The completely obvious counter response to this bad point is that policy B, which is different than policy A, has an additional downside which is downside number 2.
And policy A is good because it has neither downside 1 or downside 2.
Does that explain the misunderstanding that is apparent from your comment?
The fact that you brought up a head tax also betrays the point. Because you know that a head tax is bad, otherwise you wouldn't have used it as an example.
You know that it isn't the same. Although it still confuses me that you would bring it up, because you didn't jump to step 2 which is to explain the difference between the 2 policies.
And the next question, that actually matters, is the clear different between a head tax and a land tax. Which is explainable via basic economic theory.
The error you're making is in limiting this cost to redistribution between income levels.
Taxes don't redistribute money from the rich to the poor or vice versa. They redistribute money from the public to the government. The government might then use the money to benefit the poor -- or they might not. They could just set the money on fire without changing how much they collect in taxes or from who. They could collect 90% of taxes from the rich and 10% from the poor and then give 100% of the money to the rich.
The reason taxing the poor is worse than taxing the rich is that it causes more harm. The money means more to the poor because it affects whether they starve or can afford rent instead of whether they can invest in some new business venture. That's why I used that example -- it makes the cost much more clear, because you immediately realize that by doing it you're going to cause someone to go without.
But that doesn't mean the cost of taxing the rich is zero. New business ventures have value too -- sometimes quite significant value. So you still don't want to just tax them for no reason, or raise their taxes by an arbitrary amount regardless of whether the government's use for the money is less productive than their own.
You are ignoring the fact that we have taxes already.
Even if you think that there is other redistributionary harm to taxes, if we found some magic tax that didn't have any dead weight loss, and also only effects rich people, then we could at a minimum replace all existing taxes with that magic new better tax.
(Perhaps total taxes could even be reduced! Because there is now extra room and value created because of the zero dead weight loss!)
Therefore the point stands that if this is the case, then it would still be a massive win to find such a magic tax.
Until, of course, it’s pocketed just like most tax money.