The big question during this strange time is who should receive aid from the government. As packages are/were being proposed, there is an inherent tension between individuals and businesses. And within businesses, there is further tension between big business and small. We saw the failings of an approach that openly favors big businesses, but it is more complicated than just reversing the “trickle down” approach. This tension is expressed in an article from a few days ago from the Washington Post. The debate can be summed up in the following quote from the article:

The choice is between two options unsavory to many: bail out some of the country’s largest corporations or watch as they put more people out of work.

Equity is key here, but how one determines what is most equitable is beyond my knowledge. Balancing direct relief to struggling individuals is critical to their immediate survival but does not ensure long-term resiliency. Already, the US is seeing record unemployment claims. Yes, there is a clearly defined cause for this, and it has nothing to do with demand. But without knowing the full extent of the impact (both in the US and globally) determining how economies will bounce back is difficult. Hopes that normal operations could start up in a short time frame are not likely to come to fruition. This is where the tension between the short-term and the long-term becomes critical. For the most vulnerable, short-term survival is critical and the most pressing need. But when all is said and done, the ability for people to return to jobs is key.

In Class 7 we discussed the assumption under a Tiebout that people have the mobility to choose where they live and therefore, a say in their public good provisions. More often than not, this is not the case as people are limited in where they can live based on factors such as affordability and accessibility. In (relatively) recent news, the City of Minneapolis voted to eliminate all single family zoning within the city limits. Part of the reasoning for this move is to increase the amount of affordable housing options available to those who wish to live in the city. This decision is important in that it recognizes that zoning has often been used as a tool to segregate populations. Additional benefits and reasoning are described in this article in The New York Times. Although the rezoning is still too recent to analyze the full effects, I began wondering what the impact would be on resident mobility within the city and the resulting public good provisions. While perfect mobility will likely still not be achieved, it is a step in that direction. Perhaps the flexibility to develop at different densities will improve residents’ ability to live in areas that match their public good provision preferences.

As markets increasingly include the sale of online goods and services, it has become common for policy makers to try to incorporate these goods into traditional revenue streams. Applying a sales tax to services like Netlfix, Spotify, and other streaming platforms is a response to the decline in typical media purchases (DVDs, cable, movie tickets, etc.). According to a recent CBS article, this is a fast moving topic and bills are commonly being introduced across the nation to address this or similar topics. In class 6 we talked about sales taxes and the impact they have on people’s willingness to purchase a good. More and more streaming services are being created each year. But I am curious as to whether or not a sales tax on streaming services will have an impact on the number of new platforms created. From informal observations (and my own experience) I know consumers are getting frustrated that they need a new subscription if they want access to certain content that once was more consolidated. With a sales tax, willingness to purchase multiple services is likely to decrease.

I was doing some research for my thesis and came across this article from 2015 which talks about the difficulties in collecting delinquent property taxes. It raises an interesting question about the priorities of the City of Philadelphia when it comes to different initiatives and agenda items. The City prioritizes collecting these delinquent taxes over putting a site back into use; however, when it comes to blighted and abandoned properties it is unlikely that the City would be able to easily collect these taxes (e.g. because of absentee property owners).

Our discussions of property taxes in Class 5 reminded me of a local tax district that I recently learned about. Some of my cousins have been getting married and recently bought houses, so when I went home for break, I learned about the reasons why they chose to live (or not to) in certain cities. One of the important factors was the Mello-Roos tax. Mello-Roos, or community facilities districts, are a way for developers to avoid paying upfront costs of constructing infrastructure by having a public agency bond pay for said infrastructure. Homeowners then pay off the debt by having additional fees attached to their property tax. I do not know the full extent to which these districts are used, although I do know they are relatively common in South Orange Count, CA. These taxes contributed to the sprawl of the county, as developers could use these districts to get infrastructure like roads and water to places that had been previously undeveloped. This differs from the special service districts we talked about in class which levy additional taxes that fund services to existing communities. In class we talked about how property taxes help fund things like schools, trash collection, etc. and that a reflection of good services can potentially be seen through higher property values. In this article from a few years ago, the sun-setting of some districts was projected to lead to an increase in home values. While many factors go into this, I think it reflects the difficulty in trying to collect taxes when residents are not seeing newer benefits and/or services from them. The infrastructure funded by the tax helped to initially attract people to neighborhoods (whether this is good or bad is another discussion), but the long term periods of the debt act as a disincentive and direct people to other similar neighborhoods in adjacent communities without it.

In a recent article by Ben Casselman of The New York Times the trend of job growth over the last few years is discussed as a promising start to 2020 and indicating a strong labor supply. However, the author also notes that wages have not seen the same increase. I found myself trying to visualize how the supply and demand curve would change over time if these trends continue. Although there are some benefits to the moderate wage growth, eventually there will be a dramatic shift in the curve as relative labor values change. Changing tax policies and other credits/subsidies will be critical in prolonging or altering the overall economic growth.

Our discussions in class the other day reminded me of an article I read in The Inquirer a few months back regarding Philadelphia’s wage tax. At-large council member Allan Domb proposed a piece of legislation that would allow eligible low-income Philadelphia workers (both residents and non-residents) to receive a refund on their paid city wage tax. According to Councilman Domb, Philadelphia taxes its poor at a rate significantly higher than comparable cities. This is particularly alarming because of the major U.S. cities, Philadelphia has one of the largest percentages of residents that fall below the poverty line. Because of legislation that requires consistent tax rates across the state, the bill – which has since been passed – does not directly address the rate itself but instead finds a bit of a loophole and will attempt to remedy the situation through direct refunds. While this is a move towards more equitable taxation, I will be curious to see how effective it is in practice, particularly because the refund relies on people being aware of their eligibility and applying for the refund.

When considering what makes good tax policy, this article brings up a question of collectability and political feasibility. With trade and other economic activity increasingly taking place online, it is difficult to assign a physical location and therefore, method of taxation. Although this is a global issue, I find it unlikely that proposed methods of addressing the issue will reach a reasonable consensus. Despite the potential revenue that could be generated from these digital services, the difficulty in enforcing any collection makes me skeptical that any achieved result would be considered good tax policy.

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