4 ms·

Land value tax would replace other taxes such as income tax. I don't see how the market would absorb this tax. Rent is set at what the market can bear. If you

Land value tax would replace other taxes such as income tax. I don't see how the market would absorb this tax. Rent is set at what the market can bear. If you raise further in light of being taxed more your renter cannot pay. Rents are set by wages. Land values are set by the ability of banks to lend against land based on the price they just lend on ... land, all "financed" by fiat money created by banks. http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-0 http://www.economist.com/blogs/economist-explains/2014/11/ec... "Land value taxation is so beloved of economists because, in theory, it does not distort decision making. Suppose a land value tax of one per cent on land value is introduced tomorrow. There can be no supply response: there would still be as much land as there is today. Neither would consumers’ preferences change, as land would be no more useful, either. So if the market for land is competitive, no transactions would be deterred or encouraged. All that changes is the price, which falls until it exactly offsets the discounted cost of paying the tax forever. The buyer assumes the burden of paying the tax, so all things considered is no better or worse off. Landlords are unable to pass the tax on to tenants, because the supply and demand of rented land is unchanged too. Furthermore, if LVTs replaced property taxes, incentives against improving homes and developing land would be removed. Yet LVT would continue to account for "undeserved" gains landowners make on the investment of others, such as the government improving nearby transport links (this feature of the tax appealed to Winston Churchill)."

prostoalex 11y ago
> Land value tax would replace other taxes such as income tax. Considering 30% of US land is owned by federal government (and there's more by states and municipalities), how would this replace the income taxes? Federal budget is comprised of 46% personal income taxes and 13% federal income taxes, so roughly two-thirds of it would have to be replaced by land value tax.
- dragonwriter 11y ago
  > Considering 30% of US land is owned by federal government (and there's more by states and municipalities), how would this replace the income taxes? By taxing the land not owned by the federal government, since obviously it can't tax itself. > Federal budget is comprised of 46% personal income taxes and 13% federal income taxes, so roughly two-thirds of it would have to be replaced by land value tax. So? Look, to replace the entirety of federal revenue (which is more than you need to replace, since obviously things like fees for uses of federal land, which are part of federal revenue, aren't going to go away with a land-use-tax scheme) with land use tax on the 70% of land not in federal use, assuming a flat per-acre tax (which has the virtue of making calculation easy, even if its not the most likely tax scheme), you'd need an annual tax of $3.02 trillion / 1.7 billion acres, or a land-use tax of about $1776 per acre per annum.
  - prostoalex 11y ago
    Not sure about the validity of the research, but entire land value of the US was estimated at $23 trillion http://www.msn.com/en-us/money/generalmoney/what-us-land-is-really-worth-state-by-state/ar-BBkTfZS http://www.msn.com/en-us/money/generalmoney/what-us-land-is-... To extract $3 trillion out of $23 trillion the tax would need to be established at an average 12% annually, which will probably cause some massive repricing.

prostoalex 11y ago

> Land value tax would replace other taxes such as income tax. Considering 30% of US land is owned by federal government (and there's more by states and municipalities), how would this replace the income taxes? Federal budget is comprised of 46% personal income taxes and 13% federal income taxes, so roughly two-thirds of it would have to be replaced by land value tax.

dragonwriter 11y ago
> Considering 30% of US land is owned by federal government (and there's more by states and municipalities), how would this replace the income taxes? By taxing the land not owned by the federal government, since obviously it can't tax itself. > Federal budget is comprised of 46% personal income taxes and 13% federal income taxes, so roughly two-thirds of it would have to be replaced by land value tax. So? Look, to replace the entirety of federal revenue (which is more than you need to replace, since obviously things like fees for uses of federal land, which are part of federal revenue, aren't going to go away with a land-use-tax scheme) with land use tax on the 70% of land not in federal use, assuming a flat per-acre tax (which has the virtue of making calculation easy, even if its not the most likely tax scheme), you'd need an annual tax of $3.02 trillion / 1.7 billion acres, or a land-use tax of about $1776 per acre per annum.
- prostoalex 11y ago
  Not sure about the validity of the research, but entire land value of the US was estimated at $23 trillion http://www.msn.com/en-us/money/generalmoney/what-us-land-is-really-worth-state-by-state/ar-BBkTfZS http://www.msn.com/en-us/money/generalmoney/what-us-land-is-... To extract $3 trillion out of $23 trillion the tax would need to be established at an average 12% annually, which will probably cause some massive repricing.