Comment by briandh | Hacker News Reader

Comment by briandh | Hacker News Reader

So the subheading is:

> Dodging taxes and regulation isn't just disruptive – it's bad for the economy

Baker then writes:

> Most cities and states both tax and regulate hotels, and the tourists who stay in hotels are usually an important source of tax revenue

Less government revenue is not inherently good or bad for the economy.

> their neighbors in condo, co-ops or apartment buildings may think they have the right not to be living next door to a hotel

Which is also why all the mentioned typically have rules residents must abide by, which may or may not forbid paid visitors. I also don't see how that is bad for the economy.

> Others in the economy will lose by bearing an additional tax burden

One party "dodging" taxes does not automatically raise those on others.

> ...if Uber and related services (like Lyft) flood the market, they could harm all drivers' ability to earn even minimum wage.

Again, not bad for the economy. If Uber and Lyft depress wages for drivers substantially, it suggests that the existing regulatory scheme is inefficient. Now, mind you, depressed wages for drivers may in fact be socially undesirable, but that is a separate question from whether it is economically harmful.

>> 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).

A 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.

1. 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.

we really do need this type of summary for so much content that is online. well played.

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