Modeling land value taxes

Part of the summary:

The way land tax was designed resulted in a limited focus on results. This created a tax system that was largely ineffective; it was too narrow to work as either a revenue or social policy tool and for decades persisted without any obvious purpose. Attempts to revitalise it in the 1980s had some success but did not fix most of its underlying problems. Ultimately land tax was abolished in 1990; not for ideological or functional reasons but because it, and the Fourth Labour Government, were unpopular, an election was imminent and abolition was seen as a way to reduce the chance of the government losing.

Singapore has a sort-of LVT if you squint hard enough:

They auction off land for 99 year leases at a time.

> One analysis I’d like to see is how a pure LVT tax shifts the tax burden toward people with less valuable homes while giving a break to people with nicer homes.

In practice this would end up being the opposite. Right now if you have two plots of land of the same size and one of them has a single big mansion while the other has a condo tower with 50 units, the mansion is valued at a million dollars and the condo tower is valued at 25 million dollars, implying that each of the condo units is $500k. So each of the condo units is being taxed half as much as the mansion, but the total for that plot of land is really 25 times as much.

Under LVT they both pay the same for the land, but then the owner of the mansion is paying 100% of the tax on the land and each of the condo owners is paying 2% as much instead of 50% as much.

You only get the result you're referring to if you have people building a single small house on a plot of land big enough for a mansion or large multi-unit building. But in that case why are they consuming so much land for such a small structure? Making inefficient use of high-value land is a luxury.

> Shifting to a pure LVT ignores the house because, of course, it’s a land value tax. So if you have the most expensive house in the neighborhood your taxes go down, but if you have the cheapest house on the block your taxes go up (assuming similar lot sizes and such).

As it should be. Land is a finite resource and taxing based on the value of the land instead of the thing you build on your land makes sense.

>it’s more progressive

Taxation based on realised employment income is more progressive. Any taxation based on unrealised gains/value is regressive, because it will be levied against people who may not have the income to support the taxation.

And yes, forcing people to move also costs money and can be seen as an extra levee against poor people who need to move to accommodate your new taxation model.

Proponents of LVT really hate poor and retired people, and tend to make up reams of excuses when this is put to them.

That might actually be the goal, to remove the last remaining poor people from gentrifying neighborhoods. All you have to do is build more expensive services, and subject the land to a new valuation and there you go, self removing poor people from your rich neighborhood.

Any solution to a problem that fundamentally comes down to undue privilege for incumbency, is gonna harm incumbents some way or another. I don't think there's much you can do about that, and it doesn't mean you shouldn't solve the problem.

Still, you're right that you need to think about how to avoid harming those interests in a way that's actively unfair or overly disruptive. I don't think people talk about this very much, because not many people are seriously talking about solving the problems LVT targets.

E.g. everyone says "tackle the housing crisis, build more houses!" but very few people actually seem interested in doing anything that would have any downside at all. At least with e.g. climate change people say "we have to make some sacrifices".

Anyway I guess the basic solution has to be that you solve the problem very slowly so people have a chance to adjust to the new regime?

No. Obviously the tax would be phased in over a long period of time and for political reasons probably include some recompense to current owners. But what, are we doomed for all time because of decisions made in the past? There will always be a new cohort of people who played by the rules of the current system and oh won't it be unfair to them. What about the people who are suffering because of the current system?

Those people also tend to already be the most regular voters...

They can sell

[flagged]

It's even worse than that. LVT, especially when combined with migration, just evicts the people who grew up in a place. It's the fastest way to create the soulless places everyone complains about.

Or have polycentric cities like Tokyo…