Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?
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Notes -
I've been enjoying asking basic math questions to destroy dearly held beliefs and I would like to continue. This one requires more intuition than cold basic math though, but it's in the same ballpark.
Let's talk about housing. Housing's so fucking expensive. Especially in desirable places! YIMBYs (or maybe abundance democrats) argue we should build more housing. A lot more. But what kind of housing? Who are we trying to help?
Well. Take a town of 150k people. A one bedroom in a decent part of mine is approaching $1600 a month and inventory is also frustratingly low across the board. Before we get to my actual point lets focus on an absurd toy non-solution first. Let's build 1,000,000 Connestoga huts across town and charge $450 a month in rent. This eliminates a lot of housing pressure but anyone but the most hardcore libertarian would recoil in horror at the thought because it would mean the town would be flooded with poor single people. Per capita tax revenue would plummet while per capita demand on public services would likely increase. Traffic would explode. Parks would be overrun with trash. Police would respond to calls by lottery. This would turn the town into a nightmare.
But we don't have to get this absurd! My contention is, because of progressive taxation, public services are diminished even if you build housing that the median income family can afford!
Looking at federal income tax, the top 1% pay almost 50% in federal income tax. The top 10% pay about 75%. State and local income taxes are structured in similar progressive style. What about sales tax? More tax is paid by people who spend more, and things that are considered essential (like food and cheaper clothes) are usually exempt. Property tax? Lots with higher assessed value and luxuries are taxed at higher rates. Public service spending is carried by the affluent.
For another intuitive look at this, a family with two kids in public school will consume $3000-7500 per month(!) in state expenditure. Public education costs alone dwarf the entirety of taxes most families pay (of which only a small amount is even earmarked for education).
Not just education. The Medicare and Medicaid we all know kicks in at the federal poverty line, but the thresholds for some kind of subsidies are high enough that a family can earn as much as $85,000 in a city like NYC and still qualify for some assistance.
This means every municipality has an economic incentive to refuse newcomers that aren't making potentially 90%ile household income. This means sure, build housing, but only 90%ile housing, or become poorer.
I would like to be wrong about this! It's frightening to think of every newcomer to your town as making it per capita poorer unless they're very affluent!
One weakness in this rationale is we don't have a solid accounting of all of the transfers. E.g. if 90% of education was funded through federal and state revenues, you could imagine purpose building a town just to have a lot of schools so that people with small kids move to it and pull funds from the rest of the country and state. But I think that number is more like 60% and a lot of the "state" funds are likely a matter of appropriation and will be distributed ~right back to where they came from.
I'm kind of surprised nobody else is pointing this out! Am I hitting on some truth neither side really cares to acknowledge because it doesn't support their favorite platitudes or am I just smart enough at economics to twist myself into a gnarly retarded knot?
EDIT: oh! one argument that I've heard from a grimacing YIMBY is that he is forced to admit I am correct, but that's why we can't do this on a local level. Instead we must mandate more housing be built on a nationwide basis (e.g. a federal #NoZoneZone authoritarian order) so any one town or city would be protected from all of the
poornot affluent people rushing to it at once and ruining it. This seems like a solution but I am still not convinced I am describing a true real and local deficiency.Market rate; society
Why did you get this absurd then? Kind of feels like you started this off with a nice strawman to anchor on a certain tone.
"Oh you want to build housing? What if it was a shanty town?!?!?!? Anyway let's talk about this."
I understand this to be your core thesis, although if I'm incorrect please let me know
Taxes
You are conflating progressive income taxation with municipal taxation, which is much less progressive. You also don't demonstrate that "lower per capita tax receipts" = "funding shortfall for services" you just assume that.
Federal or State income taxes being progressive does not tell us much about the marginal fiscal impact per new household in a city.
The focus on per capita tax revenue is also somewhat myopic. You could also look at tax revenue per acre/sq kilometer/sq mile and that would go up. Also the average doesn't matter, the margin does. As long as people are marginally economically net positive, you're ahead.
Property taxes account for 72% of municipal revenue. They are pretty regressive, which is why many cities have many carve outs for old people, etc.
Property taxes in my experience typically have lower mill rates in dense cities versus suburban/exurban cities. Because:
Services
The provision of almost every public service is made more efficient when provided in a more densely built area, all else equal. This is due to both physics (less meters of road/pipe/wire per person) and economies of scale.
A quick google tells me that NYC spends $36,293 per student per year which is 91% above the national average. That's $3000 a month at the highest end. Also not entirely sure why we're focusing on educational costs specifically here.
Similarly I have no idea what medicare has to do with building stuff? If Medicare is a bad system that's a federal level society problem, and not a reason to not build more homes.
Additional economic activity
You completely neglect the fact that more people = more demand for stuff and more people to work at jobs to supply that stuff = more 1%s who own the new businesses that supply the stuff so even if you want to fixate on the progressive tax brackets you'll get more of that too. Plus more 10%ers to be accountants and lawyers to support the new businesses, etc
Closing thoughts
Your argument seems to rest on the concept of "tax net takers are bad in large numbers" which is obviously true.
Your argument seems to ignore the fact that NYC, SF, Chicago, LA, London, Hong Kong, Shenzhen, Tokyo, Ruhr corridor, etc are all massive economic engines and the most productive and prosperous places in all of human civilization.
As stated above, building more results in simultaneous increases in demand/supply for everything while also bringing down marginal service costs, with the one assumption that you are in fact adding productive adults, which any non-failed civilisation should be capable of doing (given this paragraph basically summarizes 10,000 years of human economic development).
If you'd instead like to discuss how the US education system is ridiculously expensive per student (it is) or that the US healthcare system mis-allocates vast amounts of capital, much of it taxpayer's (it does) by all means do so. But don't wrap incredibly expected value positive construction in with that. You can walk and chew gum at the same time.
Also, how did the USA's various urban areas come to dominate it's economy if this held? How did they ever work if they, according to you, should have had their tax base average down into insolvency?
Because there's two debates we can have.
If I don't include the absurd Connestoga huts example people get lost in believing that everyone you add to a town that's not a homeless alcoholic like Million Dollar Murray enhances it with their unique specialness. But it's pretty clear even just poor people that aren't mentally ill and are simply of modest means would also make it poorer. If you accept that, then you should be open to the idea that the line might be higher than "Connestoga Charlies" and it may in fact be people of median means.
Now look up the national average. It is almost always an enormous amount of cost per household with kids that is almost certainly not paid by the median household.
The point of mentioning this is to give an example of how even modest families that aren't blatantly poor or problematic are more costly than the revenues they directly produce. You should be thinking "fuck, these hard working people who pay their taxes and aren't an obvious drain on society are actually a net drain on society" (at least if we look at direct receipts/expenses).
I do. But at least these places in the US were built over centuries over a variety of different economic and political climates. Lets talk about today. In case we haven't noticed, NYC isn't going out of its way to build housing that people earning $70,000/year median income can afford ("market rate" bros in shambles). If you go to any town or city's subreddit where some new development is approved you find rage that these are not anywhere close to affordable and appear to just be catering to the affluent.
I doubt the city council has economists explicitly standing up showing slide decks with a line between dead weight citizen and productive contributor near the top, but they are clearly internalizing this on some level.
How do we look at it? What tools do we have to measure this? This just seems like a hand-wavey way of smuggling in "Connestoga Charlies are all net contributors, too!" :hugging_face: but you were skeptical of me even bringing that type of person up at all so I assume you believe, again, there's a line somewhere. Where is it?
It would be nice if you were to stop consistently misspelling "Conestoga".
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