Final answer:
The belief that higher business and real property taxes negatively impact local businesses is partially valid due to potential discouragement of economic activity, but such taxes also fund vital local services and infrastructure, benefiting the business community. The relationship between taxes and business dynamics is complex, with both positive and negative effects.
Step-by-step explanation:
The belief that imposing higher business taxes and real property taxes adversely affects local businesses is partially valid. High taxation can lead to reduced investment and spending by businesses and can be particularly burdensome for small businesses with tighter margins. However, property taxes are a primary source of revenue for local governments and fund services like police, fire departments, and the maintenance of public areas, which can benefit the business community. Property taxes tend to be progressive as they are concentrated among higher income groups and reflect property value, which can be influenced by a region's economic health and desirability.
The local tax structure, by funding essential services, contributes to a constructive force for business participation in local governance. However, governments also need to be cognizant of the economic consequences of high taxation, which can affect productivity and growth. Therefore, the relationship between local taxes and businesses is complex, as taxes support services that benefit businesses but can also discourage economic activity if perceived as too high