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Someone buys a property: +-------------+------------+-------------+-------------+ | Type | Land Value | Cover Value | Total Value | +-------
by kilotaras 3y ago
Someone buys a property:
+-------------+------------+-------------+-------------+
| Type | Land Value | Cover Value | Total Value |
+-------------+------------+-------------+-------------+
| Parking Lot | 100 | 0 | 100 |
| Dump | 100 | -20 | 80 |
| Skyscrapper | 100 | 100 | 200 |
+-------------+------------+-------------+-------------+
Land increases in price and buyer sells it:
+-------------+------------+-------------+-------------+
| Type | Land Value | Cover Value | Total Value |
+-------------+------------+-------------+-------------+
| Parking Lot | 150 | 0 | 150 |
| Dump | 150 | -20 | 130 |
| Skyscrapper | 150 | 100 | 250 |
+-------------+------------+-------------+-------------+
In all 3 cases there's a profit of 50, but dump payed the least taxes followed by parking lot and then skyscrapper. In places where land increases in value it incentives to hold the land while NOT developing it.
- AnimalMuppet 3y agoWhen money is growing on trees, pick it. If you have an undeveloped piece of land worth X, and it becomes worth Y if you put a skyscraper on it, then you do it as long as the cost of construction is less than Y-X. Sure, you can make money by doing nothing, if the price of land is going up. But you can make that money plus the money you make by building the skyscraper by, you know, building the skyscraper. If you're not willing to do that because of the increased taxes on the skyscraper, then either you're refusing dollars to avoid spending a dime, or the tax regime in your city is really out of control. So I'm not buying your argument here at all. Developers develop because they make money doing it. The absence of a land-value tax isn't what stops them.
- kilotaras 3y ago> Developers develop because they make money doing it Not all property is owned by developers. I would go even further and say that most properties are owned by non-developers. Some people use land as store of value. We as a society would be better off if they used, e.g. gold instead.
- kemotep 3y agoIt is the case now that it is profitable to purchase a rundown building, pay the property taxes for years, and then sell it for a significantly higher value. This is the rent seeking behavior that a Land Value Tax seeks to eliminate. By taxing the unimproved value of land, it becomes more and more burdensome to sit and do nothing with your property. By making improvements (building a high rise, running a productive farm, etc.) you reduce your tax burden and, as you mentioned, profit from the improvements. So a more productive and efficient land use is encouraged by land value tax compared to property taxes which since they are based on total value (including improvements) you could potentially be punished for being more productive than just doing nothing.