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Property taxes are calculated on the value of the land and the value of the structures. So current land value taxes would be about $2000. If a state were to pas
by dangjc 6y ago
Property taxes are calculated on the value of the land and the value of the structures. So current land value taxes would be about $2000. If a state were to pass a land value tax, it would calibrate it so that it offsets a reduction in the tax on structures. The granny would probably pay $5000 in land tax and $5000 in improvements tax. Only in an extreme case would she pay something very different, like maybe she lives right next door to a train station. In which case, she could probably sell her property for $10mm. I’m sure policies could be designed such that she would not be forced out until she died and then some of that $10mm gain would be collected in back taxes.
- refurb 6y agoBut that's not how a land tax would work. The idea is that it captures most of the value of the land (removing the rent seeking ability). So the tax would be at a level that makes owning the land itself not very profitable, it's the improvement upon the land that offering return on investment. So you'd likely see a $1M plot of land taxed at $100,000+ per year. It would make zero sense to sit on the empty plot or build a single family home. It would incentive someone to building a $10M building on it.