Anyway, it’s not that property taxes are 1:1 with population, however it does broadly correlate with density. A farmer next to a subdivision is a more extreme version of the same thing that only represents which farmer happened to sell their land. Meanwhile a farm is less value per acre than a housing development. Just as high rises represent more value per acre than garden style apartments and garden style apartments beat single family homes.
Land value taxes on the other hand ignore all such differences by design. The farmer pays the same amount per acre as the subdivision next door. LVT can capture increases in value as regions develops, but those increase don’t line up with political borders.
Beachfront vs non beachfront isn’t equivalent, but two random fields in Northern Virginia next to each other with similar features should be. Anyway, LVT definitely doesn’t care about what you built on the property so this distinction just doesn’t matter.
Yes… but you can’t just look at vacant lots in abstract. If you have two lots and they are taxed the same or similarly, either the owners pay the tax, or they sell the lot because they aren’t providing enough economic value to afford the tax, or someone who has a better economic idea buys the lot to improve it.
In your example of the similar lots you demonstrated this, but drew the wrong conclusion. You realize economic value from the 10,000 people on Lot A because the owner had to either improve it or sell it so that it produced economic value.
> Beachfront vs non beachfront isn’t equivalent
Right, which is why they’d be taxed differently… depending on other factors. L
> Anyway, LVT definitely doesn’t care about what you built on the property so this distinction just doesn’t matter.
That’s exactly the wrong conclusion! LVT cares more than any other tax system because the tax revenue is reflective of the economic value of the property.
This is false, LVT only cares about the hypothetical economic value not the actual economic value.
Let’s say you buy some farms in the middle of nowhere for 10k/acre and put a theme park on it. Your LVT taxes are in theory unchanged, though depending on how it’s calculated the value of land around that property increases because it’s near a theme park. Then your LVT increases when people start to build hotels etc around your property.
What’s interesting about this model is your incentivized to develop land as a single unit. A sports stadium with associated shops and hotels is valued as if none of it was there, but split it up and each pays more due to proximity to other businesses.
And of course what improvements are included or excluded is rather arbitrary. Do you value a natural or artificial pond differently?
No, it’s not false. It’s the fundamental characteristic of LVT. There is no separation of the hypothetical and actual.
> Let’s say you buy some farms in the middle of nowhere for 10k/acre and put a theme park on it. Your LVT taxes are in theory unchanged, though depending on how it’s calculated the value of land around that property increases because it’s near a theme park. Then your LVT increases when people start to build hotels etc around your property.
Right. That’s the point. You buy land and the taxes are such that you must improve the land or otherwise produce economic value to be able to hold it. As land around the theme park becomes more valuable taxes eventually go up and then the economic value of the park must continue to increase in order to support the taxes (at the same profit level).
> What’s interesting about this model is your incentivized to develop land as a single unit. A sports stadium with associated shops and hotels is valued as if none of it was there, but split it up and each pays more due to proximity to other businesses.
I’m not following this very well. I think it makes you think more holistically, but I am not tracking well that building a sports stadium and shops and hotels would cause the value to be as though nothing is there. Can you elaborate? I would think that someone developing the parcel to include all of these things would be doing so to decrease risk, increase economic engagement so they can afford taxes at a specific, desired profit level.
To simplify.
If it’s the actual economic value then the city would include your neighbor who’s brown lawn slightly decreases your property values and a million other factors nobody can actually account for. It’s always going to be calculated based on some simplified model or the best guess of some accessor.
Even stepping into the abstract some choices are just arbitrary. Do you decrease the LVT of a superfund site? What if someone drained swampland so the land it’s self is more valuable?
I’m sure we can come up with contrived examples of things, but be open-minded to how things could work.