4 ms·

Essentially by definition. Property value escalation either means that the actual structure becomes more valuable (something that very rarely, if ever happens)

Essentially by definition. Property value escalation either means that the actual structure becomes more valuable (something that very rarely, if ever happens), or that the ground underneath becomes more valuable. The land becoming more valuable (up to $X) is equivalent to saying that the market price on the unimproved land is now worth $X-- this is the amount of money any landowner can expect to collect on this land, given the proper amount of improvements upon it. Since there is no marginal cost in the unimproved land, the entire return to this land is pure Economic Rent. The LVT would tax the full Economic Rent of the land (which is essentially equivalent to an annuity on $X, for land worth $X.) Why wouldn't the landlord pass on the LVT to tenants? Competition, essentially. Land would only be desirable to be held by people well-equipped to build (and gain the return on) the proper improvements. These landowners would have an advantage over a landowner who does not make the proper improvements, and competition would drive the market rate of rent towards the marginal cost of improvements.

dredmorbius 11y ago
My understanding is that LVT is just that, a tax on the land value. In any significant urbanised setting, that's an alternative statement of "the value of the surrounding services of the property". More specifically, it excludes the improvements to the property itself. That aside, your tax on the unimproved economic rent makes some sense. What of increases in cost of rents or property values?
- bufordsharkley 10y ago
  Didn't see this until now. In general, increases in the cost of land rents are an important signal that more should be built on this land; it's a bummer for current residents, but it's important that this demand is satisfied. I believe financial instruments should help: an insurance policy taken by landowners against a rise in land value should dampen the blow. (This is somewhat related to the housing markets championed by Case/Shiller) But in general, it would probably lead to a bigger change, that is that the property with the greatest risk (land) would likely tend to be owned by those best equipped to deal with this risk. More people would prefer to be renters (what's the advantage of landownership, anyway, other than the investment potential that the LVT would relieve?)
  - dredmorbius 10y ago
    Thanks again. I'm mulling this but leaning to UBI, living wage, and land tax. A few other bits as well.
dredmorbius 11y ago
And thanks BTW.

dredmorbius 11y ago

My understanding is that LVT is just that, a tax on the land value. In any significant urbanised setting, that's an alternative statement of "the value of the surrounding services of the property". More specifically, it excludes the improvements to the property itself. That aside, your tax on the unimproved economic rent makes some sense. What of increases in cost of rents or property values?

bufordsharkley 10y ago
Didn't see this until now. In general, increases in the cost of land rents are an important signal that more should be built on this land; it's a bummer for current residents, but it's important that this demand is satisfied. I believe financial instruments should help: an insurance policy taken by landowners against a rise in land value should dampen the blow. (This is somewhat related to the housing markets championed by Case/Shiller) But in general, it would probably lead to a bigger change, that is that the property with the greatest risk (land) would likely tend to be owned by those best equipped to deal with this risk. More people would prefer to be renters (what's the advantage of landownership, anyway, other than the investment potential that the LVT would relieve?)
- dredmorbius 10y ago
  Thanks again. I'm mulling this but leaning to UBI, living wage, and land tax. A few other bits as well.

dredmorbius 11y ago

And thanks BTW.