A capital gains tax is not “essentially indistinguishable” from a land value tax if rents rise and the owner never sells the property. The owner gets to collect increased rents for as long as his family owns it, and even his heirs don’t have to pay the tax on transfer (since capital gains are untaxed on inheritance in America due to the step-up basis and apparently also for the Chinese Land Appreciation Tax). Kevin Erdmann has written a good series of articles on focusing on the rental value of land rather than only sales prices: “A Conceptual Starting Point for Housing Affordability and Public Policy” <https://www.mercatus.org/bridge/commentary/conceptual-starti...>
Doesn't the government technically own all the land in China and then just lease it to individuals? Slightly different system.
In fact, LVT would be unconstitutional at the Federal level today, but a Land Appreciation Tax would not.
[..] The justification for a lower tax rate on capital gains relative to ordinary income is threefold: it is not indexed for inflation, it is a double tax, and it encourages present consumption over future consumption. ... Finally, a capital gains tax, like nearly all of the federal tax code, is a tax on future consumption.[..]
https://www.investopedia.com/ask/answers/06/capitalgainhomes...
Unlike LVT, an appreciation tax is a transaction tax, which can be shifted to the purchasers.
If your idea were put on the ballot it'd probably pass.
This is also why capital gains taxes don’t get priced into equities and securities.
I see what you are trying to say about capital gains taxes not being in the "price" of securities. But they are in aggregate because taxes inevitably have to be paid. The whole market can't go up without transactions pushing it higher. And all transactions that make profit get a portion pulled out for taxes. They quite literally act as a damper on how fast a market can move.
Prop 13 already locks people in. With this law they'd have an even bigger reason to bank land forever.
Since a high ROI in the short term promotes speculation (and not development), it seems like this would reduce speculation and the likelihood of bubbles forming.
Of course that's a ridiculously oversimplified view. There are a zillion different ways to stack this, which is what would happen in any case. To spur development and not just buy-and-hold, the law might be written to exempt certain kinds of improvement costs.
If you want support for your causes in the US, you probably don’t want to compare it to a communist regime that scares the crap out of people.
Unless this was sarcastic...?
I’m guessing you don’t know that this was also true of America in the 18th and 19th centuries and a large part of how it became so wealthy. Especially when they kept using slaves long after it was banned elsewhere.
Also, a Land Appreciation Tax isn't really radically different from the status quo in the US today. Land appreciation is already taxed as capital gains, it's just that the capital gains tax is intentionally set to be low to incentivize investment. The argument here is that we should not only NOT incentivize speculation on land, we should deter it by carving out a "special" capital gains tax on land.