Case A: ------- Undeveloped, small city. LVT kills any incentive for developers to purchase and build.
Case B: ------- Developed, large city. LVT hurts existing landowners, they become politically active and shut it down.
Also, land is already taxed as a part of property taxes.
I'm not sure this is right.
There would be an incentive to purchase unused or underused land -- the price will be lower! Relatively high taxes will encourage the landowner to sell the underperforming property rather than hold onto it for years waiting for its value to increase (speculation).
There would also be an incentive to build -- the developer can build as extravagantly as he wishes without dramatically increasing taxes. Want to build a giant tower? Tax is almost the same as if you built a parking lot.
Similarly, in a large developed city, LVT would probably _help_ existing property owners, if their property has a substantial building on it and is collecting good rent. If you own a parking lot or a crummy 2-story retail/2-apt building, then you're gonna have a hard time.
At least now you could buy a large lot and put, say a laundry building, there. With LVT, assuming minimum lot sizes remains a thing, simply disincentivizes small scale developments which is exactly what a undeveloped small city needs.
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TLDR: large scale development isn't going to happen in a small city, therefore the cost to even develop at all is now increased with LVT as there are minimum lot size requirements per zoning (for things like side walks and parking)
Regardless, you need not a small undeveloped city, just take an abandoned part of any city. The same thing applies.
The LVT may be the same percentage statewide, but the absolute amount of tax depends on the value of the land which is drastically different across regions. Cf downtown San Francisco vs farmland in the central valley.
> just take an abandoned part of any city
If it's abandoned (bad crime, fewer services etc) the land will be worth less than elsewhere in the city.
Property tax already takes into account both the improvements and the land. Property tax is also different depending on region.
The main purpose of LVT, I thought, was simply to abandon property tax and tax solely on the land, which would be assed on a square feet basis, with little consideration to the area. What you're already exists with property tax (albeit California AFAIK implemented something where your property isn't reassesed).
It's arbitrary that land in a desert is worth less than land in a major city?
> I see no difference between this and the existing property tax
Property tax: your parking lot in the middle of downtown San Francisco isn't worth much so we won't tax it much.
LVT: You could build a condo building on that parking lot, so we will tax you the same amount for the land as if you had.
LVT creates strong incentives to build useful things on the land.
Also, your desert example doesn't make sense. If the land is usable it will be taxed. If it is not usable it wouldn't be taxed heavily under the current scheme, nor would it be with LVT.
I think you're underestimating how much people are already taxed for their property.