5 ms·

I love the concept of a Land Value Tax. I wish some government could actually try it out somewhere, as an exclusive tax.

zero_iq 11y ago
Wouldn't this just cause the top 1% (who own the majority of the land in most countries) to charge higher ground rents to cover their land taxes, and make it increasingly difficult for anybody else to own land and buy out their freeholds, entrenching the wealthy elite even further?
- kspaans 11y ago
  If you added an LVT on top of current taxation systems, probably. One way to make it more revenue-neutral would be to reduce some other tax, like sales taxes. But now consider idle land that's being held speculatively. The landowner expected to sell it at a profit in the future, but now those profits are impacted by the LVT. To maintain their profits they would need to find tenants for the land in order to pay the LVT. (Or settle with less profit! :P)
  - dublinben 11y ago
    >To maintain their profits they would need to find tenants for the land in order to pay the LVT. Can you expand on this point please? Why would it be necessary to earn rent from idle land in order to pay the LVT? Wouldn't unused land have a low value under a LVT system, much like it does now?
    - kspaans 11y ago
      Good catch! I didn't mean to say the landowners would be forced to earn rent on their idle land. I meant that if they didn't want to pay the tax themselves (equivalent of charging the tax to their tenants), they would have to do something economically productive with the land. This is the theorized win-win with LVT: there is encouragement to develop otherwise-idle land. I think you're right that introducing LVT could lower the already low values of unused land. Perhaps its introduction would mean a glut of sales of land: fire sale! (Win-win again, according to my armchair-economics analysis. :P)
      - dublinben 11y ago
        I guess I still don't grasp how this aspect of LVT is any different or better than property taxes, as currently designed. If you own undeveloped land, you still have to pay the standard property tax rate on that land, according to its assessed value.
        mahyarm 11y ago
        LVT implicitly incentivizes density. Assessors can determine your $1mm single family home close to a very dense business & housing district could potentially represent 12 $250k condos, which is $3mm of value and tax you as such. LVT would also not be based on the actual structures on the land, so it all about what the potential value of the usage of the land would be.
        hawkice 11y ago
        > LVT implicitly incentivizes density. Not necessarily, although that is certainly how it works in many residential situations. The general idea is removing the marginal disincentive for high-value _use_ of the land. Property taxes mean for every dollar you spend making something more awesome, you get taxed more. Instead, we should encourage awesomeness on the margin, and discourage people who use land that could be awesome in the least awesome ways.
      - majewsky 11y ago
        > This is the theorized win-win with LVT: there is encouragement to develop otherwise-idle land. That's only a win-win if you don't value nature very highly. LVT sounds like it would force even faster destruction of invaluable biospheres like rainforests.
- ZoeZoeBee 11y ago
  In that case you could easily institute a progressive tax system whereby each additional property you own faces a higher tax rate, effectively preventing the wealthy elite from holding on to land indefinitely. We already do this a little bit in some states of the US with homestead taxing
- kspaans 11y ago
  Oops, I was wrong! There are arguments that landlords already charge as much as they can, and as the supply of land can't be changed by LVT, they can't easily pass on the tax to their tenants. http://www.landvaluetax.org/frequently-asked-questions/why-lvt-cannot-be-passed-on.html http://www.landvaluetax.org/frequently-asked-questions/why-l...
  - ams6110 11y ago
    This is incorrect because demand for land is inelastic, or at least mostly so. Yes you can choose to rent in areas that are lower-value/more affordable but in many cases that's less practical than it's worth. For the most part you have to pay the market rate for where you want or need to be located. If we assume that all rents are at their market maximum (e.g. landlords are making minimal but still positive profit) then adding a tax to all will simply raise that equilibrium.
- dredmorbius 11y ago
  A recent HN discussion turned up a town in Alaska which has done this.
ams6110 11y ago
Do you not have property tax where you live? I thought it was ubiquitous as it's the ultimate way the government prevents an individual from really owning land.

zero_iq 11y ago

Wouldn't this just cause the top 1% (who own the majority of the land in most countries) to charge higher ground rents to cover their land taxes, and make it increasingly difficult for anybody else to own land and buy out their freeholds, entrenching the wealthy elite even further?

kspaans 11y ago
If you added an LVT on top of current taxation systems, probably. One way to make it more revenue-neutral would be to reduce some other tax, like sales taxes. But now consider idle land that's being held speculatively. The landowner expected to sell it at a profit in the future, but now those profits are impacted by the LVT. To maintain their profits they would need to find tenants for the land in order to pay the LVT. (Or settle with less profit! :P)
- dublinben 11y ago
  >To maintain their profits they would need to find tenants for the land in order to pay the LVT. Can you expand on this point please? Why would it be necessary to earn rent from idle land in order to pay the LVT? Wouldn't unused land have a low value under a LVT system, much like it does now?
  - kspaans 11y ago
    Good catch! I didn't mean to say the landowners would be forced to earn rent on their idle land. I meant that if they didn't want to pay the tax themselves (equivalent of charging the tax to their tenants), they would have to do something economically productive with the land. This is the theorized win-win with LVT: there is encouragement to develop otherwise-idle land. I think you're right that introducing LVT could lower the already low values of unused land. Perhaps its introduction would mean a glut of sales of land: fire sale! (Win-win again, according to my armchair-economics analysis. :P)
    - dublinben 11y ago
      I guess I still don't grasp how this aspect of LVT is any different or better than property taxes, as currently designed. If you own undeveloped land, you still have to pay the standard property tax rate on that land, according to its assessed value.
      - mahyarm 11y ago
        LVT implicitly incentivizes density. Assessors can determine your $1mm single family home close to a very dense business & housing district could potentially represent 12 $250k condos, which is $3mm of value and tax you as such. LVT would also not be based on the actual structures on the land, so it all about what the potential value of the usage of the land would be.
        hawkice 11y ago
        > LVT implicitly incentivizes density. Not necessarily, although that is certainly how it works in many residential situations. The general idea is removing the marginal disincentive for high-value _use_ of the land. Property taxes mean for every dollar you spend making something more awesome, you get taxed more. Instead, we should encourage awesomeness on the margin, and discourage people who use land that could be awesome in the least awesome ways.
    - majewsky 11y ago
      > This is the theorized win-win with LVT: there is encouragement to develop otherwise-idle land. That's only a win-win if you don't value nature very highly. LVT sounds like it would force even faster destruction of invaluable biospheres like rainforests.
ZoeZoeBee 11y ago
In that case you could easily institute a progressive tax system whereby each additional property you own faces a higher tax rate, effectively preventing the wealthy elite from holding on to land indefinitely. We already do this a little bit in some states of the US with homestead taxing
kspaans 11y ago
Oops, I was wrong! There are arguments that landlords already charge as much as they can, and as the supply of land can't be changed by LVT, they can't easily pass on the tax to their tenants. http://www.landvaluetax.org/frequently-asked-questions/why-lvt-cannot-be-passed-on.html http://www.landvaluetax.org/frequently-asked-questions/why-l...
- ams6110 11y ago
  This is incorrect because demand for land is inelastic, or at least mostly so. Yes you can choose to rent in areas that are lower-value/more affordable but in many cases that's less practical than it's worth. For the most part you have to pay the market rate for where you want or need to be located. If we assume that all rents are at their market maximum (e.g. landlords are making minimal but still positive profit) then adding a tax to all will simply raise that equilibrium.
dredmorbius 11y ago
A recent HN discussion turned up a town in Alaska which has done this.

ams6110 11y ago

Do you not have property tax where you live? I thought it was ubiquitous as it's the ultimate way the government prevents an individual from really owning land.