Disclaimer: IANAL, IANATA, this isn't tax advice, etc<p>Foreigners residing in Japan are eligible to participate in furusato nouzei, but Americans might want to note the following clause in the section "Tax Must Be the Legal and Actual Foreign Tax Liability" in Publication 514 Foreign Tax Credit for Individuals[1], which states:<p>>Subsidy received. Tax payments a foreign country returns to you in the form of a subsidy do not qualify for the foreign tax credit.<p>>The term “subsidy” includes any type of benefit. Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations.<p>Whether or not furusato nouzei falls under this clause seems to be up for some debate, and AFAIK the IRS hasn't made a public determination on it either way. I don't risk it, but I am under the impression there are some that do.<p>Alternatively, the furusato nouzei portion could be not included in the tax credit? But would it be worthwhile...? Sounds like it depends on the situation and frankly seems like a lot of work to get a few gift baskets.<p>[1]: <a href="https://www.irs.gov/publications/p514#idm139978451112272" rel="nofollow">https://www.irs.gov/publications/p514#idm139978451112272</a>
> This counsels that a young person born and educated in e.g. Gifu move to Tokyo after graduation to earn a living.
> Many, many do. While Japan’s overall population is declining, Tokyo’s increases by about 100,000 people per year.<p>Notably this differs from America in that rent acts as a natural counterbalance here. It’s not common knowledge that a university graduate should move to New York or San Francisco, in fact if you aren’t in a top paying field it’s probably common knowledge that one should not move to these cities.<p>I wonder how much different the population landscape of the United States would look like if NYC, the Bay Area, LA etc had ever figured out how to plan for urban growth in the same way Tokyo did (context: you can afford a small single family home on a middle class income in Tokyo, I think prices there are around 30% over other Japanese cities)
Omoshiroi! This is a really nice write up. Education is indeed very expensive and the towns outside of Tokyo have difficulties surviving, with only older people remaining there. Those towns have to be very creative to attract money and people. You can get a house for free, if you will live there, similar to some Italian towns.<p>In the Netherlands we have similar issue of towns fighting for survival in more rural parts (Limburg). They try to combine schools of several towns to reduce the cost of teachers, and similar combining police stations.<p>Lowering the friction for such 'gift tax' is interesting, Japanese are big into all kind of little gifts: if you go on holiday you bring something small, an Omiage. If you attend a birthday party, not only you bring a present (which is usual everywhere) but the guest also get a little gift in return, an Okaeshi.
Actually, many city governments in Japan already get a redistribution from the national government in "local tax allocation" to the tune of over 100 billion USD every year, and cities like Tokyo with a large tax base or industry are excluded from this. Then there's "hometown tax" so local municipalities in Tokyo and the surrounding areas are losing local tax revenue.<p>I suspect a that many are not aware that taxes destined for the local government they live ("residence tax") in gets diverted to other cities, especially because many salaried workers don't do their own taxes, as was mentioned in the article. It's gotten to the point that some cities were running public service announcements saying that "donating through hometown tax leads to loss of local tax revenues" and saying funding for services like city-run daycare can be at risk.<p>In 2021, Tokyo "lost" about 400 million USD in tax revenue to this program, so it's not a trivial amount.
"And then some bureaucrat realized that this created a market: you, as a city government, can bid for taxpayers to select you as a hometown."<p>This is the most Neal Stephenson thing I have read all morning.
There's an ongoing study into furusato nôzei in Finland. However, they've apparently decided to axe the tax rebate aspect of the system, so it's basically only going to amount to a municipal marketplace ("donate" money, get goods in return).<p><a href="https://www.epressi.com/tiedotteet/maaseutu/japanin-kotiseutulahjoitusmallille-ideoidaan-suomalaista-vastinetta.html" rel="nofollow">https://www.epressi.com/tiedotteet/maaseutu/japanin-kotiseut...</a>
(2018)<p>Discussed at the time: <a href="https://news.ycombinator.com/item?id=18256660" rel="nofollow">https://news.ycombinator.com/item?id=18256660</a>
Looks similar to Equalization payments [1] already used in several places in the world.<p>It looks to me that this being organized by the state should be more fair and efficient, but the additional "local connection" you get is a nice touch though.<p>[1] <a href="https://en.wikipedia.org/wiki/Equalization_payments" rel="nofollow">https://en.wikipedia.org/wiki/Equalization_payments</a>
Wasn't 2008 roughly the start of the "every town has a mascot" trend in Japan? I wonder if this law helped is part of the reason pushing that trend.
The article generated a big discussion at the time (254 comments): <a href="https://news.ycombinator.com/item?id=18256660" rel="nofollow">https://news.ycombinator.com/item?id=18256660</a>
Now imagine this playing out on a global scale. Canada grabs a ton of doctors from developing nations. US grabs tons of Canada's best home grown talent for whatever economic purposes.
Full disclosure: I am a londoner and this is basically how our tax system works except without any of the optionality.<p>I am not at all convinced that towns have a claim to the tax revenue of people who don't use it's services. The fact regions can force this onto Tokyo etc is a failure of democracy, not a success. We're living in a time when Cities work, and bigger cities work better than smaller ones. They're cheaper, greener, have better social outcomes, provide more opportunities etc. And the response is to try to starve them of revenue to maintain some strange tradition life of worse health, poorer people, less equality and more pollution.<p>/rant
Japan is writing the economic textbooks. Tremendous government debt, nearly 100% total tax burden. Quantitative easing will tend to target entities in say Tokyo. It creates an imbalance that will only get worse as people move to Tokyo to get some of that QE. Negative interest rates, they basically are giving away free money so that the economy doesn't blow up in a deflationary death spiral. This imbalance to then be fixed comes in form of another tax? The hometown tax?<p>Worse yet, the government debt to gdp is still increasing. Debt still going up and up because they havent balanced the budget since the early 90s.<p><a href="https://en.wikipedia.org/wiki/Lost_Decades" rel="nofollow">https://en.wikipedia.org/wiki/Lost_Decades</a><p>Japan has lost 3 decades so far because of high taxes and high debt. You can't default on the debt, it's your own people who own the debt. Defaulting would mean your elderly have to go back to work. Yet it's worse... Japan has a major silver crime issue and well unspoken probable slave labour problem.<p>The fix for Japan is so simple yet for 30 years nobody has been willing to do it.