1% is typically the value most people talk about for a land tax. If anything often it is less. This makes it similar to other property taxes that are already out there.
I have no idea where you live but in many countries it is common for taxes to be introduced, raised and lowered as different political parties get in power.
Also the assumption is that income and other taxes will be reduced as land taxes are introduced to the amount the government makes would be about the same. It would just mean those with property would pay more while those earning wages would pay less.
So you are proposing to increase average taxes by $5000, and you appear to talk about that as though that is some trivial amount the anverage New Zealander can afford. A land tax as you propose is an absolutely massive taxation increase.
Say that a land tax takes 50% of all rental income (a large amount) in New Zealand and puts that into the government - how can you believe that is equitable for renters or owners?
The point of a land tax is to take the land profits from private owners, and put it into government coffers. Note that it doesn’t change the amount that renters pay. You think that it would correct rent prices in New Zealand?
$1 million of land is not extreme wealth - it is only 2 or 3 times an average home. Where do you live that $10000 after tax is not a huge amount of money annually?
So, you have a lot of land with a single family home, but you are taxed for it as if 20-unit apartment building was standing there. Which, in the long run, incentivizes you to sell your home to some developer that would actually build such building.
Now you can discuss if that's fair approach, or just a way to force people out of their homes.
Everything I have read just uses nearby property prices. Very similar to GV valuations as we currently do in New Zealand with our council rates (just use that figure rather than another). As market prices shift, your Capital Value remains relatively constant (maybe inflation less depreciation), and the Land Value shifts to meet market value (usually upwards, whenever your property rating is updated).
In New Zealand we currently have a partial land-value-tax called rates, although they are usually far below LVT suggested taxation rates. Rates are low, but still a significant drain. Mortgages are also similar to a LVT - your mortgage has to pay the land value - and that is certainly more than suggested LVT. Apparently the point of an LVT is not to get revenues, so I don’t quite understand how that works. A tax that is less than a mortgage already is - hmmmmmm - how can that help?
Ironically house prices are set by people bidding against each other for how big their mortgage can be. The tax won’t shift house prices, just shift money from private equity to government? See: https://news.ycombinator.com/item?id=34097478
The arguments I have read are usually so vague and seem to always miss critical details. I am not a property or economics specialist, yet I see glaring problems and omissions in well received blogs: that doesn’t bode well IMHO.
In developed countries the government takes around 30%-40% of your labor income if you work. In that sense taking 20% of capital income (rent, dividends, capital gains) is still on the low side.
Apparently I just don’t understand what you are saying.
Australia's ACT is in the middle of introducing a land value tax to replace stamp duty over 20 years; it's perhaps not the largest land value tax that could exist but they're ~10 years in and it's having a good effect on increasing home ownership rates and decreasing rents. You can read about it here: https://www.prosper.org.au/campaigns/stamp-duty-to-land-tax/...
[The ACT Government] also promised that the reforms would be revenue neutral, reassuring residents that this was not a tax grab.
If we had a stamp-tax, then relevant.
In terms of fairness, the reality is that it's actually really fair for those who have owned land for a long time, because they currently benefit disproportionately from land values going up (they don't cause the land values to rise much, but society as a whole does). The current system is grossly unfair for renters, because they contribute to society just like everyone else but don't benefit from land value increases.
Land only goes up in value because of the improvements that society makes around it, which is why land in cities is very expensive. It isn't fair for landowners to benefit from this and renters to not benefit. Of course the biggest beneficiaries of all this are the banks, but most landowners didn't work for the value of their land, so losing the value of their land is fair.
Recent buyers are the most screwed over by land values dropping, because they did work very hard for their deposit and mortgage but then without working less they suddenly lose out a lot.
If you have built on the property and are getting a rental of 5%, you are now getting 4%. That is a 20% decrease in property valuation, ignoring expenses (which make the figures much much worse). And the few articles I have read don’t talk about anything nearly as low as 1%. That is why I called it “communist” (I shouldn’t have been so inflammatory), because the government is taking money from a long term investment. Maybe it would be possible to introduce it slowly and fairly, but I can’t see how a government could actually do it and stay elected.
The simple mechanics of “just 1%” are usually just glossed over in the articles I have read.