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Japan's Hometown Tax

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Re: Japan's Hometown Tax

#11

Post by 21 »

pgz wrote: post #2

I always found this system very interesting, since the citizen can decide how some of their tax money is spent (besides voting). On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.

> On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy

Everybody says that, Catalonia that it pays more to Spain that it receives back, California and New York to the rest of US...

But it's the only way to have nation states, otherwise we'd have to go back to city states (which some people like Taleb actually advice).

Re: Japan's Hometown Tax

#12

Post by jessaustin »

21 wrote: post #11
pgz wrote: post #2

I always found this system very interesting, since the citizen can decide how some of their tax money is spent (besides voting). On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.

> On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy Everybody says that, Catalonia that it pays more to Spain that it receives back, California and New York to the rest of US... But it's the only way to have nation states, otherwise we'd have to go back to city states (which some people like Taleb actually advice).

It's inevitable given the political structure. Since votes are distributed by area and population rather than by wealth, wealthier political divisions will necessarily bribe poorer ones into political compromises that are closer to the wealthier divisions' preferences than they would have been without bribery. The only way to prevent that would be for the overall polity to have much lower taxes and thus much less money to divert to interdivisional bribery. (In many polities, this would be very much against the preferences of the wealthier divisions, so this "solution" is never seriously contemplated.)

Of course, TFA describes a different way to come to substantially the same result. Tokyo still makes the important decisions.

Re: Japan's Hometown Tax

#13

Post by overdrivetg »

Do you think some kind of bidding or voting on the maximum donation amounts involved would make sense?

Ie, cities each vote on what they think a "proper" maximum reward would be, then set it at the average.

Relatedly, I'm not sure why a supermajority of cities agreeing to limit gifts would be generally in their best interests:

1. Lower status ("less popular") cities gain more donations via rewards

2. I would guess status/popularity probably follows a power curve

3. Therefore the long tail cities are able to flatten the distribution curve by bidding their way up

4. If they went back to a level playing field, they would drop back down the curve, likely losing the (smaller but nonzero) overall financial boost gained after bidding

Basically: if I am a small city with few "natural" benefactors, I can bid my way up the curve (admittedly depending on the elasticity of "demand") such that I gain more from more donations than I lose in larger rewards.

...unless the market today just drives everyone to offer the maximum reward?

Super interesting though, thank you for sharing this!

Re: Japan's Hometown Tax

#14

Post by SmellyGeekBoy »

pgz wrote: post #2

I always found this system very interesting, since the citizen can decide how some of their tax money is spent (besides voting). On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.

> On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.

Heh, funny that richer parts of the EU say this about Italy itself.

Re: Japan's Hometown Tax

#15

Post by gwern »

eigenspace wrote: post #4

That was a fascinating read! I love when things like this happen and some new emergent behaviour appears that was unexpected. This did end up much better than most perverse incentive situations. In fact, I'm not even sure I'd call this a perverse incentive but maybe I'm musinderstanding the definition.

I consider it perverse because it incurs overhead in making the payments (eg if you send a town $100, get back a gift card for $100, and cash it for $97, that's $3 burned for nothing whatsoever than if they could've just transferred $100 into your bank account or not taxed it in the first place), deadweight loss in gifts (you don't value those hometown meibutsu at their market value to other people), overhead from the incentivized marketing competition (ad campaigns aren't free), and of course, the existence of a competition at all means that the hometown which incurred the expenses of rearing/educating you in the first place probably isn't going to get your tax revenue because they don't offer anime pineapple rewards or whatever is hip at the moment. None of that was intended nor is it useful. Interesting & amusing, but not useful.

(And anyway, I had to title it something. 'Japan's Hometown Tax' makes it sound unutterably boring & technical, when the second-order effects are what's interesting.)

Re: Japan's Hometown Tax

#16

Post by overdrivetg »

jessaustin wrote: post #12
21 wrote: post #11

Earlier quoted context omitted.

> On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy Everybody says that, Catalonia that it pays more to Spain that it receives back, California and New York to the rest of US... But it's the only way to have nation states, otherwise we'd have to go back to city states (which some people like Taleb actually advice).

It's inevitable given the political structure. Since votes are distributed by area and population rather than by wealth, wealthier political divisions will necessarily bribe poorer ones into political compromises that are closer to the wealthier divisions' preferences than they would have been without bribery. The only way to prevent that would be for the overall polity to have much lower taxes and thus much less mon…

Wait - are you claiming that New Jersey is somehow bribing New Mexico for policy concessions?

https://www.moneytips.com/is-your-state-a-net-payer-or-a-net...

Re: Japan's Hometown Tax

#18

Post by make3 »

Won't this degenerate to a pure bidding war, with people sending their money to the town that gives them the largest fraction of cash equivalent returns, transforming into only a tax reduction ? like, cities will bid to something like ninety-something% cash equivalent, to the very limit of their margin because it's winner takes all.

Re: Japan's Hometown Tax

#19

Post by HarryHirsch »

SmellyGeekBoy wrote: post #14
pgz wrote: post #2

I always found this system very interesting, since the citizen can decide how some of their tax money is spent (besides voting). On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime.

> On the other hand I have always lived in Northern Italy, and around half of my taxes go to the poorer regions of Italy, mostly to be squandered by corruption, clientelism, and organized crime. Heh, funny that richer parts of the EU say this about Italy itself.

That's just because their unwashed masses are only familiar with economic migrants from Southern Italy. If you paid any of them a holiday to Turin or Milan they wouldn't know what befell them, they couldn't even identify the country!
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