From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same.
The proposed land tax in my state has land tax for seniors accrue against the property and is paid upon sale or death.
The objection to this is that it's a "death duty", to which the response is that you did absolutely nothing to help increase that land value. In fact, you worked against increasing efficiency by holding on when the land could be used for more productive purposes.
That's why the Georgist land tax is such a good idea; it taxes you based on the gains that the rest of society generated for you. Whereas a property tax also taxes you for your own investments.
Just like capital gains on equities. I don't pay until I realize. I'm happy to pay some property tax in the meantime to keep gov't services running in the area.
But any other method is terrifying to me and makes me start thinking "What super rural state can I move to in retirement to buy a nice parcel and be seriously left alone these days?"
With land you're continually depriving the local community of the space they need to live and work. Every hour spent commuting past your yard is an hour wasted. You should continually pay for the privilege of exclusive access to an in demand part of the nation.
That's precisely what this is though? Do keep in mind that the for land tax proposals suggest it replace at least a portion of income tax.
> upon me selling that land to someone else. Just like capital gains on equities.
But with your equities investments you don't get any personal gain until you sell. When you hold land, you're benefiting from it the whole time. We're not talking about only the financial benefits from value appreciation, but rather in the main the benefits that you get from society from having the land.
That's pretty unfair. People who lived a lifetime in that house did contribute their bit to making the area thrive and become more valuable by keeping the place nice, being good neighbors etc.
If you think that doesn't contribute at all, consider the opposite. If they lived there for decades and let the house go to ruin and were belligerently antisocial all the time, that drives away nicer people and helps turn the neighborhood into a bad place.
>From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same.
They can sell the land and move
If you can afford to pay 100% upfront for the cost of doing an addition to your house, then you can almost surely afford the ~1% per year additional taxes. This is technically a 'punishment' but it is a really minor one, and I doubt it actually impacts many people's decisions
My desk is right across the street. Used to see that shack every day before covid.
Can't see to find it on http://www.taxfairnessproject.org though
I'd argue actually charging the owner of the shack $100,000/year in property taxes (~1%) wouldn't have a radically different effect than charging them a 2% land value tax.
Under an LVT, the landowner contributes the same amount to their community regardless of their use of the land -- empty plot, slum, or well maintained building. This is good for the community overall.
So in your example the speculator sitting on an empty plot would see their carrying costs double. How could that not affect their behavior?
Once the property is sold, a developer will find that their profit from constructing a building is roughly proportional to the floor area regardless of whether there is a 1% property tax or not. This is because the profit they earn per-sqft is more than the resulting net present value of future property taxes on it. Therefore they maximize the density as allowed under zoning and we end up with an efficient use of the land.
(Of course dumb zoning laws messes everything up, but that's a whole separate topic...)
also observe that the purpose of the tax is not strictly to raise revenue, but to address what would otherwise be an externalized cost and make the housing market more efficient.
In a time and place where we can deficit spend well, and more demand unlocks more growth, this should be the primary purpose of most taxation.
California's mistake may be ONLY protecting homeowners from newcomers bringing change, and leaving renters out to dry.
There are a finite number of people with finite needs. Growing the housing stock to house this finite number of people is not "perpetual growth" and it's downright offensive to say that when we camps of homeless people, camps of people in RVs without other housing, camps of people in their cars, people working full time but only able to afford overcrowded housing, and at the same time enormous wealth within miles.
A society that allows such destitution while others have enormous wealth is not one that is running well. It shortchanges us all, economically.
You don't have to go that far, but it's good to know it's "safe" to do so. Land isn't produced so there's no "100 Laffer curve is 0" type problem in the slightest.
However, once you can no longer gain money from speculating on its increase in value, that also means that there's going to be a ton more land available for increased use. The coercive effect of a land value tax is balanced by the a reduction in people speculating.