>You have a UBI at the cost of massive wealth destruction in the housing market.
Have you played monopoly? It's literally like that. It's a board game where if you land on a square with a house owned by another player you have to pay "rent" but technically it's a tax because landing on a square that is not owned by a player costs you nothing. In other words, owning the house essentially gives you the right to "rob someone at daylight", you're forcibly taking money from someone else and the money manifests itself as the appreciation of your house.
I'm not talking about rent paid to a landlord here, I'm talking about the value that has been forcibly extracted by sitting on the land, i.e. by denying a more productive use of the land. If you live and work near a neighborhood and that neighborhood's land value goes up then a portion of that rise was taken from your own hard work.
Therefore a correction of land prices via LVT is not wealth destruction, because the wealth was not generated by the land, it was generated by people living near the plot of land (they don't even have to live on that plot). What happens is that people get to keep their existing wealth instead of being forced to give it away to a land owner.
>How does LVT favor dense housing?
A LVT is entirely based on the land value of the plot. If you build a duplex, then the tax burden on each unit is half as much vs a single family home. Suburbs have lower land values, which means building single family homes there is viable. Cities have higher land values, which means building apartments will reduce the high tax burden significantly.
>And why would people be building more now that they don't expect the price of homes to ever increase?
If you overpay for land, then you have less money available for building a house. If you want more rental income, you must build more units.
Compare this to classical land value extraction, where you can sit on the land and let it go up in value without building anything. You should rather ask how the latter encourages construction since it offers a secondary income stream that has nothing to do with building housing.
>Yeah I'm not quite seeing how the pie gets bigger.
Land prices are often high because of proximity to employers. If someone builds a single family home on that plot, then that person is essentially denying other people the ability to live near those employers. As mentioned above, the LVT would allocate the land in a way that increases the number of people that get access to these employers, which means more people can have higher incomes.