Giving investors a greater incentive to build big things is the exact point

Yes, that's exactly the idea. We have a problem in the US where many metro areas do not have enough housing, in part because building big things is penalized by the tax code. By changing the tax code to not penalize construction, we hope to get more construction.

Maybe property tax should be inversely related to improvements, considering that improved land generates tax revenue in other ways, e.g. wage tax, sales tax, etc.

That's quite hard to measure.

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.

A lot of property taxes go to funding schools, so...more housing = more kids = more money need to educate them. It is nice that they use property taxes from businesses as well, but to completely detach the education need formulas from tax formulas sounds really dangerous.

Surely more housing also means more working adults and more taxable income, so this could be handled with a local income tax.

Are any school districts outside of Prop 13 California funded by primarily income or sales tax? But ya, you would need to do something like that if you were to tax land rather than improvements given schools, police, and lots of infrastructure needs scale up with improvements.

A significant part of the educational budget of the US comes from federal funds and federal funds are almost entirely income taxes (some other sources exist).

Most schools receive very little funding from the federal government. Maybe the poorest school districts this makes up a significant part of their funding, but for most school districts it doesn't.

> In 2021, state and local governments in the United States collected about 630.21 billion U.S. dollars via property taxes.

> 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.

Here is a good breakdown of funding in CA:

https://peecs.net/2021/03/10/how-are-california-school-budge...

So federal is...7%?

The problem is that federal grants often go through the state, so some percentage of "state" may source from the feds.

Of course it's all academic in a way, because money is fungible.

The table implies funding origins via taxes (local vs. state taxes, for example). I don't think any ED money is going to CA first before going to the districts. CA is also a special case where more funding is state level (due to Prop 13).

Agreed. I’m only familiar with Texas and Texas schools are funded with property tax with some redistribution to poorer districts.

I think a local income tax is the correct way to handle it theoretically but I don’t know any specific examples.

Then you have to come up with a way to evaluate the improvements, which might be tricky and subjective

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.

Detroit still has more houses than people wanting to live there.

This is a great situation in which to use an LVT.

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.

How many of those houses are on the fringes, and how many are in the CBD? If there's a vacant plot next to the town hall then it doesn't really matter how many vacant houses are a 1-hour drive out, that town-hall adjacent plot is being wasted.

> How many of those houses are on the fringes, and how many are in the CBD?

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...

It's a very important question to ask: how big should the investor's bill be? For labor, for durable goods, for energy, etc., the investor pays in proportion to what they have taken from others.

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, that they land owner did not build.

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.