23 Apr The ‘Amazon’ head tax is a bad idea. It will turn the lights out in Seattle . But on the other hand–a drone delivery tax would be fabulous
Posted from Seattle, WA on Earth Day, April 22, 2020.p
The head tax is a bad idea. It runs up against a law of microeconomics, a law that cannot be repealed by legislatures, city councils nor even self-aggrandizing Presidents. It’s the law of the downward-sloping-demand-curve and among its implications is that if you tax something, you will get less of it. If widgets are selling for $10 and a $2 tax is placed on widgets, fewer widgets will sold, other factors being equal.
That is exactly why it will never ever under any circumstances be a good idea to tax employment per head. If we tax the creation of a job, there will be less creation of jobs, (assuming other factors are held equal). This is not debatable, it’s the way the world works. Apples won’t fall upward based on any laws passed by the Seattle City Council or other body of government.
How many fewer jobs? Why bother to find out
How much fewer jobs will be created as a result of the law is determined by the elasticity of demand for creating jobs in the place where the head-tax is levied. If people are consumed by a desire to have their offices and job sites in Seattle because of past investments there or because Seattle is just so immensely cool, that will mean the demand is inelastic and there won’t be a lot of jobs lost. If investors love Seattle but are also drawn in by the allure of Spokane, Boise or Chicago, the desire to invest in job creation in Seattle might be quite amazingly elastic. A jobs tax could take us from job-health to job crisis in a hurry, under the highly elastic scenario.
It’s not worth finding out how elastic the market is. The City Council should vote the head tax down, and since it hits companies like the Seattle Times and Kaiser Permanente, they should quit calling it the Amazon tax, a big misrepresentation (thanks Danny Westneat Seattle Times April 13, 2020).
But let’s not miss the clue…
But in the statement, “When we tax something, we get less of it,” is a loud, screaming clue as to what we should be thinking about taxing. GreenReboot dislikes all the regressive taxes that tax things that are essentially good, like property taxes which fall hardest on the poor, sales taxes which fall hardest on the poor, and payroll taxes which fall hardest on the poor. GreenReboot wants to see a TAX SHIFT away from this “taxation of good things” to taxation of ‘externalities’—costs imposed on people but not paid for by the imposer–and money raised from rents on the use of government-owned assets, which usually also are associated with externalities.
A tax on Drone Delivery could eventually raise serious money and best of all would reduce Drone Delivery
Think about what drone delivery could mean for your neighborhood and your ability to pursue happiness. Any time you are outside near the street, machine with whirling sharp metal blades that makes a whiney, annoying, creepy sound will be added to the noise shed that is a modern city. This machine could injure or kill you if anything went wrong–but things never go wrong, right? Drones have already killed their own operators. Of course Drone Delivery would have an up-side. A drone could deliver medication quickly to a stroke victim. But that would be rare and exempt from our tax. Let’s face it, Drones will mostly be bringing pizza and ice cream for people who have enough money to not plan ahead. Under the stiff new tax, people could order up drone delivery, but they would have to think hard about it, so there wouldn’t be a zillion drones flying through everyone’s neighborhood.
Drone Delivery: Exactly what we SHOULD be taxing
It makes sense to tax goods that use public rights of way. It makes sense to tax goods that have externalities–that is, they impose costs on others besides their paying customers. If a drone buxxes down your street, you are forced to listen, if you are interested in your own security you will have to keep track that it isn’t going off track, and you will have to look at it, and take it from a professional artist, drones can be ugly. They are a perfect example of a good that imposes an external cost. These are the things we should tax–things people don’t really need and that annoy and inconvenience others and degenerate the quality of other people’s lives.
People will look back on the Generation that traded Swallows in the sky for Drones in the sky
Swallows used to be abundant in the city of Seattle. Barn Swallows and Violet-green Swallows winged over the neighborhoods and Purple Martins nested in the downtown. If you were walking on Capitol Hill on a summer day in 1970, you could look up and usually see a Swallow in graceful flight foraging for insects. These Swallows are now struggling to keep a toehold in a city where they were once welcome. Only occasionally in the summer does a Seattleite now look up and see a Swallow. By the end of the 20’s in a quite likely evil scenario, a Seattleite could look up and never see a Swallow but always see a drone. In order to not complete this trade—Swallows for drones—we’ll have to do something to help Swallows and something to hold drone use at a low enough level that drones remain rare, …And the space where drones are not is space we can invite our Swallows to return to.
Let’s do it.