WSJ Suggestion for Detroit

[mwilbert]

"...no sales tax; no VAT; no taxes on capital gains, interest income or earnings outside Hong Kong; no import or export duties; and a top personal income-tax rate of 15%."

I think that what mwilbert was alluding to was that Hong Kong goes wayyyyyy beyond what a NEZ does....

That is exactly what I was referring to. If you made Detroit into a true tax haven, guaranteed to last for a long time, that was also part of the continental US, I am pretty confident it would make a huge difference in the economics and population of the city.

That isn't going to happen. Congress isn't going to uniquely favor Detroit over every other location in the country, and a program of this type has to be tightly targeted. The benefit comes because you attract a whole bunch of tax and regulation averse people and companies into one place; if you have many such places you dilute away the effect. Also, such a program would have a huge cost in terms of Federal revenue, and it is hard to imagine Congress coming up with a way to pay for it.

People propose stuff like this because they have ideological axes to grind--either they would like to demonstrate how low taxes and regulation would lead to utopia, or they need some kind of proposal to address the problems of a place like Detroit without the actual governmental intervention they abhor, and they don't care whether the proposal is politically impossible to accomplish.

[Wesley Mouch]

...snip...That isn't going to happen. Congress isn't going to uniquely favor Detroit over every other location in the country, and a program of this type has to be tightly targeted....snip...

This argument hits at the core of the debate. If you believe that Detroit was targeted and unfairly deprived of its economic oxygen, then it makes sense to craft a targeted solution.

What I believe is that Detroit was no more targeted than any other city -- but that we were less well prepared to handle the storm.

MV is correct that this won't fly not because its not a good idea for Detroit, but because why should the residents of Jefferson County AL, FallsCreek RI or Stockton CA not get the same benefits. Or Chicago and IL. They have massive civic pension debt. Let's make the Loop a Hong Kong zone too.

Thus, this won't happen.

But it should happen. Libertarians like me believe that if we simplified our taxes and regulation to minimal levels, we would see Hong Kong economic benefits that would do more to solve poverty than we've accomplished with the 'War on Poverty'.

Is this simply an attempt to allow multinational corporations to rule? No. In fact the edge given multinationals if their ability to navigate countless rules and regulations, and their ability to kill innovative small firms who just cannot scale up to do so.