Land value taxes don't factor in improvements. Improving the land results in no property tax change, so they incentivize doing more useful things with the land.
The problem is determining what the land is worth. If you use a periodic market-based auction system (the only known way that could possibly yield accurate prices), then you give the government and the wealthy extraordinary power to kick people out of their residences, even ones in which the tenants built the house. Good for the collective perhaps, but terrible for individual autonomy. This could be mitigated by auctioning off longer length (~say 30 year) leases, but you can end up with huge value mismatches after 30 years of change, just like today, and I suspect there would be other unintended consequences. For example, things wouldn't be built to last, they'd be built to generate as much value as possible before the lease is auctioned off again.
And even then, you haven't really determined what the land is worth, since any rational auction participant is considering how much money can be made with the existing improvements on the property.
That being said, I hope they do try it in Detroit, since I have no stake in the city and it seems like it has more to gain than to lose from such an experiment.
Wrt "even ones in which the tenants built the house": For me the baseline of implementing LVT is that ppl don't have to pay it for their primary housing (or a much lowered version of it). Is that controversial?
Of course, remember that apartment buildings are commercial businesses…
Also excluding homesteads destroys the public schools, because they’re often in areas that really only have houses and a Walmart or two, and if the entire property tax burden is transferred to the Walmart it’ll just close.
Overall, I think there are so many impracticalities and second-order problems with implementing LVT that it seems like nothing more than a fantasy mental exercise.
Usually that is solved by various measure to slow down the tax increases for existing homeowners - which can be good or bad, depending on whether you're a homeowner or somebody looking for a home.
Whereas in an LVT system, a person just gets priced out as the neighborhood increases in value with nothing to show for it, even if they spent money to build or improve the house.
I don't see how having regular auctions to determine what the land is actually worth is compatible with true land ownership. You auction the land to determine the tax, someone pays more than the current lessor, then that highest bidder gets to lease the land from the government and kick out the old lessor. Where does ownership of land and ability to sell it and profit from improvements come into play?
Unless you are in the Georgism-lite camp that says no auctions, just let government appraisers put value on the land as they do today and base the property tax on that exclusively instead of the current combined property tax. In this case you still have property ownership/buying/selling, which is far superior. I think the pros could outweigh the cons in limited situations, specifically downtown metro areas. But you have to accept a lot of bad pricing in this scenario, because these are the same assessors who allow all of those single story parking lots to profitably exist in downtown metros throughout the country.
These appraisers would all of a sudden wield huge influence, and one appraiser's opinion of the value of being near trendy shops or a park or a waterfront could vary significantly from another's. At least now they can use market data from similar properties to come to a tax assessment, since the tax is being assessed on the full value of the property.
Nobody's actually suggesting randomly auctioning off people's land at periodic time intervals.
You're arguing with ghosts.
You might be surprised if you visit r/georgism.
But the point is that if you don't do auctions, you don't know how to price the LVT, and you don't actually know if the resulting inefficiencies are more significant than the core problem with taxing productive land use that Georgism tries to address.
> You're arguing with ghosts.
You're selectively arguing with a fraction of a comment.
This system wouldn't work, because you would be measuring the property value not land value
The goal of an LVT is to insulate a landowner's tax bill from being affected by their own improvements. Its anti-goal is to insulate a landowner from changes in land use around them.
Shifting the tax burden from homeowners and productive businesses onto idle land holders means that those that drive the community will penalize investment less and use limited resources in more effective ways.
Efficiency helps the wealthy, but it can help those with less even more, as it matters more.
Take a look for yourself[0]. This is just outside of the downtown area. Loads of vacant lots. This is theoretically prime real estate, and would be ripe for development. The problem is, it's the fucking hood and no one wants to live there. Detroit emptied out over the decades and those empty lots _used_ to be decaying crack houses. So several years ago Detroit had them leveled to reduce blight. Now they're whining that people are just "speculating" by sitting on the empty land. If there was even the slightest hint that developing this land made sense economically, someone would have done it by now. It's just too convenient to the downtown area. And yet, no one has. Perhaps there's more at play than just people trying to sit on empty land.
0: https://www.google.com/maps/place/Detroit,+MI/@42.3370378,-8...
Build a 200 unit apartment complex in an area with a housing problem and jobs currently unfilled ... yep.
Build a gigantic house to be occupied by a single very wealthy family .. not so much.
But how to measure the difference? The simple market value of the improvements is not going to be accurate.
> In FY 2023, the Department of Education (ED) had $271.01 Billion distributed among its 10 sub-components.
Maybe they just burn that quarter trillion, but I suspect it ends up in the districts eventually.
https://peecs.net/2021/03/10/how-are-california-school-budge...
So federal is...7%?
Of course it's all academic in a way, because money is fungible.
I think a local income tax is the correct way to handle it theoretically but I don’t know any specific examples.
It seems easier to just have a land value tax, so you don’t specifically disincentivize development. Then, you can spend that tax money to provide services that promote the other stuff: beautify downtown and add public transit, that sort of thing.
But what has the investor taken from the public when they build? The best possible answer, in my opinion, is the value of the land they occupy. This exclusive use of a portion of land deprived all others from using it. That is the value of the land, and there are roughly two sources of that value: proximity to all the other things that others have built, or access to natural resources. And importantly, the investor is not the source of that land value, that comes from society as a whole or from nature.
So that's why the land value is an appropriate object of taxation: it's a payment to us all for what we have been deprived of. A person who builds a massive structure of great value on a piece of land has built that structure, but they didn't build the land or the bounty that the land provides.
If if someone in your neighborhood repaints their house, your land becomes more desirable. This is true for you and others!
The provision of good emergency services and hospitals and libraries and other amenities raises the land values within their service areas. (They don't raise the value of the buildings.)