Following this line of reasoning would suggest that all unimproved land is always worthless, which is obviously not true given that people buy unimproved land all the time. Moreover, it would suggest that knocking down a building on a piece of land is never a correct decision, since land with a building on it would always be worth more than that same land with the building removed, which is also obviously not the case.
> Is it the value someone else would've paid?
Yup, the market value of the land were it unimproved. There are various ways to estimate this value.
The problem is what counts as an "improvement". LVT proponents tend to go with the technical/legal definition, which is basically permanent structures built on the property, and consider everything else which contributes to the market value of the property to be part of the "unimproved" value. However, that "unimproved" value was still created by human beings, not an inherent part of the land. Some or all of that "unimproved" value may even be due to the efforts of the owner of the land, without involving any structures on the land itself.
To illustrate, let's say a developer buys some vacant land and, after reserving space for residential lots, adds roads, electricity, water, sewer, communications, convenience stores, etc. Those residential lots are now worth quite a bit more than the original land, despite having no "improvements" as yet. That increase in value is 100% due to the efforts of the developer, and yet a LVT would call it "unearned" and attempt to tax it away. Where is the fairness in that?
Location.
A free and un-used plot in SF is worth a lot.
but the value (including the location) only exists if the eventual goal of adding improvement to the land is possible (or is doable). If i stipulate that the land is forever unused (e.g., i contaminated it with poison which cannot be removed), then the land would become worthless, regardless of the location!
but what is the value of the land if it's not the improvements upon the land?
If i left the land wild and free and un-used, what would the the value? Is it the value someone else would've paid?