Some arguments against a land value tax
post by Matthew Barnett (matthew-barnett) · 2024-12-29T15:17:00.740Z · LW · GW · 27 commentsContents
Core problems with the LVT An LVT discourages searching for new uses of land An LVT implicitly taxes improvements to nearby land Can't the LVT simply be patched to address these issues? The government has incentives to inflate their estimates of the value of unimproved land An LVT is unlikely to replace many existing taxes Disruptions under the LVT The precedent set by a full LVT An LVT would massively disrupt millions of people's long-term plans The purported effect of an LVT on unproductive land speculation seems exaggerated Final words None 27 comments
To many people, the land value tax (LVT) has earned the reputation of being the "perfect tax." In theory, it achieves a rare trifecta: generating government revenue without causing deadweight loss, incentivizing the productive development of land by discouraging unproductive speculation, and disproportionately taxing the wealthy, who tend to own the most valuable land.
That said, I personally think the land value tax is overrated. While I'm not entirely against it—and I think that several of the arguments in favor of it are theoretically valid—I think the merits of the LVT have mostly been exaggerated, and its downsides have largely been ignored or dismissed for bad reasons.
It agree the LVT may improve on existing property taxes, but I think that's insufficient to say the policy itself is amazing. In my view the LVT is at best a useful but highly limited tool ("the worst tax policy ever, except for all the others that have been tried"); at worst, it is a naive proposal that creates many more problems than it solves.
In many ways, the enthusiasm surrounding the LVT seems like it has morphed into a kind of ideological fervor, where it is treated as a universal solution to a wide range of housing and economic problems. In various circles, the LVT has transcended its role as a reasonably sensible tax policy and is instead hailed as some sort of panacea to a disparate set of barely connected issues. This sentiment is epitomized by the meme "Land value tax would solve this", which is often repeated in response to housing-related debates on Twitter.
In this post, I aim to balance this debate by presenting several arguments that challenge the overly optimistic view of the land value tax. To be clear, it is not my aim to provide a neutral analysis of the LVT, weighing up all the pros and cons side-by-side, and coming to a final conclusion about its value. Instead, this post will focus exclusively on some of the most significant arguments against an LVT, which I feel are often ignored by even the most intellectually honest proponents of the LVT.
If you'd like to get a more complete picture of the overall merits of an LVT, in order to assess for yourself whether the negatives of the LVT outweigh the positives, I recommend reading this blog post series on Astral Codex Ten. There you will find a positive defense of Georgism, the philosophy most closely associated with the LVT.
Core problems with the LVT
A fundamental issue with the land value tax lies in the tension between its theoretical appeal and its practical implementation. On paper, the LVT is often presented as an efficient, distortion-free tax that encourages productive land use. However, I argue that this "naive" version of the LVT—the simplest and most commonly proposed form—actually contains intrinsic economic distortions that disincentivize using land efficiently.
Even in the best-case scenario, the naive version of LVT suffers from an inherently narrow tax base, limiting the revenue it can generate. Attempts to address its flaws, as outlined below, would further erode this already-limited tax base while also making the proposal significantly more complex, both administratively and legally. These issues ultimately undermine the practicality and effectiveness of the LVT as a policy tool.
An LVT discourages searching for new uses of land
Perhaps the most significant drawback of the land value tax is that it inherently discourages landowners from searching for new and innovative uses for their land. This stems from the fact that if a landowner successfully discovers a valuable resource or identifies a creative way to utilize their land more productively, the government will increase their tax burden accordingly. In other words, the moment a new use or resource is discovered, the land’s "unimproved value" rises, and the landowner is immediately penalized with a higher tax bill.
Take, for example, the case of surveying land for oil. Imagine a landowner invests significant time, money, and effort into exploring their property to determine whether it contains untapped oil reserves. If they do find oil, the value of their land would skyrocket because the presence of oil dramatically increases its economic potential. However, under an LVT system, this increased value does not benefit the landowner in the way it traditionally would. Instead, the government essentially "seizes" the added value by taxing its rental value away, eliminating the incentive to discover the oil in the first place. This happens regardless of the landowner’s investment in the exploration or the associated risks they took to find the oil.
This disincentive to search for new ways to use land is intrinsic to the land value tax: since a landowner does not actually create the oil on their land, but merely discovers it, the oil would be part of the land's "unimproved value", which is inherently subject to taxation under the LVT.
As far as I can tell, this argument was first given by Zachary Gochenour and Bryan Caplan in 2012. As Bryan Caplan argued,
You might think that this is merely a problem for a handful of industries. But that’s probably false. All firms engage in search, whether or not they explicitly account for it. Take a real estate developer. One of his main functions is to find valuable new ways to use existing land. “This would be a great place for a new housing development.” “This would be a perfect location for a Chinese restaurant.” And so on.
An LVT implicitly taxes improvements to nearby land
Another issue with the LVT is that it acts as an implicit tax on nearby land development.
To understand why, consider that the value of unimproved land tends to increase whenever nearby land is developed. For example, if someone builds new infrastructure, housing, or businesses on neighboring plots of land, the surrounding area becomes more desirable and valuable as a result due to network effects and proximity. Under a land value tax, this rise in land value would lead to higher taxes for the owners of nearby, unimproved plots—even though they themselves did nothing to cause the increase.
This is important because it implies that, under an LVT, landowners with large plots of land are disincentivized to create any improvements they make to one part of their property, as it could trigger higher taxes on nearby land that they own. For instance, if a developer owns multiple adjacent parcels and decides to build housing or infrastructure on one of them, the value of the undeveloped parcels will rise due to their proximity to the improvements. As a result, the developer faces higher taxes on the remaining undeveloped land, making development less financially appealing in the first place.
This creates a counterproductive dynamic: developers may hesitate to improve their land or invest in new projects because they know that any improvements will increase their tax burden on adjacent parcels. Instead of encouraging development, as LVT proponents often claim, this dynamic can actually discourage it, particularly for those who own large amounts of land in a given area. In this way, the LVT could unintentionally slow down the pace of development and undermine one of its supposed benefits—promoting more productive land use.
I first learned about this critique of the LVT from the The Concise Encyclopedia of Economics by Charles Hooper. He explains,
George was right that other taxes may have stronger disincentives, but economists now recognize that the single land tax is not innocent, either. Site values are created, not intrinsic. Why else would land in Tokyo be worth so much more than land in Mississippi? A tax on the value of a site is really a tax on productive potential, which is a result of improvements to land in the area. Henry George’s proposed tax on one piece of land is, in effect, based on the improvements made to the neighboring land.
And what if you are your “neighbor”? What if you buy a large expanse of land and raise the value of one portion of it by improving the surrounding land. Then you are taxed based on your improvements. This is not far-fetched. It is precisely what the Disney Corporation did in Florida. Disney bought up large amounts of land around the area where it planned to build Disney World, and then made this surrounding land more valuable by building Disney World. Had George’s single tax on land been in existence, Disney might never have made the investment. So, contrary to George’s reasoning, even a tax on unimproved land reduces incentives.
Can't the LVT simply be patched to address these issues?
Supporters of the land value tax have, of course, responded to these critiques by suggesting that patches could be introduced to address its flaws.
Typically, these suggestions modify the simple uniform LVT proposal—which simply taxes unimproved land value (the "naive" LVT)—by incorporating tax exemptions, deductions, or other stipulations to prevent unintended consequences.
For instance, to solve the problem that an LVT eliminates the incentive to search for better uses of land, some proponents suggest that a well-designed LVT could include compensation for landowners who invest time and resources into discovering more efficient or productive ways to utilize their land. Similarly, to address the criticism that the LVT discourages development by large landowners—since improvements on one parcel of land raise taxes on nearby parcels they own—governments could offer tax reductions or exemptions to developers who improve a significant amount of land within a single geographic area. This could offset the disincentive effect for those most affected.
However, these proposed fixes fail to address a deeper and more fundamental issue: adding such patches to the LVT fundamentally undermines its ability to function as a substantial source of tax revenue.
Even in its simplest "naive" form, the LVT has a narrow tax base. The reality is that the vast majority of global wealth is created through human labor and innovation, not through the inherent value of natural or undeveloped land. If this sounds counterintuitive to you, perhaps imagine being transported to Earth millions of years ago, before humans evolved. Being the only human on Earth, you'd "own" all the natural resources on the planet, but you'd be unable to access almost any of the value tied up in those resources, because unlocking that value requires human labor and tools that haven't been invented yet.
To get more quantitative, the World Bank estimated[1] that about 13% of the world's total wealth comes from natural capital and urban land: the specific type of wealth that the LVT is designed to target. By introducing exemptions, compensations, or other stipulations meant to address its shortcomings, the LVT’s tax base would likely shrink even further, below this estimate of 13%. This would limit the tax's purpose as a meaningful revenue source. In trying to fix the distortions of a straightforward LVT, policymakers would risk eroding the tax’s core economic viability altogether.
Moreover, these fixes would introduce significant complexity into the tax system, undermining the LVT’s reputation as a simple and efficient tax. Take, for instance, the proposal to compensate landowners for uncovering better uses of their land. To implement such a measure, governments would need to assess how much of a land's value increase is attributable to the landowner's discovery efforts versus external factors, such as improvements in surrounding infrastructure, or changes in market conditions. These assessments would require intricate and subjective valuations that are very difficult to quantify accurately.
This kind of patch could easily result in a bureaucratic nightmare. It would necessitate the creation of complex appraisal mechanisms to evaluate each individual case, demanding significant administrative resources and expertise. Ensuring that these evaluations are accurate, consistent, and transparent would be an enormous challenge, and the process would inevitably be prone to errors, costly legal disputes, and political manipulation.
Governments would likely struggle to reliably make these determinations without introducing distortions to the market. Moreover, risk-averse investors would likely be discouraged from getting involved with such a system, as it would become more difficult to reliably predict the outcome of disputes. These dynamics undermine the core claim among supporters of an LVT that an LVT would generate "no deadweight loss".
The second proposed patch—to offer tax breaks or exemptions to large land developers who improve nearby tracts of land—comes with its own set of problems. While it might address concerns about discouraging development, this approach would disproportionately benefit large-scale developers and wealthy landowners who hold vast amounts of land. As a result, this adjustment would undermine one of the LVT's central selling points: the idea that it hits the richest landowners the hardest.
The government has incentives to inflate their estimates of the value of unimproved land
The implementation of a land value tax also seems likely to create incentives for governments to expand the scope of the tax, rather than limiting its application purely to unimproved land. This makes sense in light of public choice theory, which views government actors—whether elected officials, bureaucrats, or tax assessors—as largely self-interested actors, rather than benevolent and unbiased actors solely interested in the public good.
The key issue here lies in the inherent difficulty of appraising the value of "unimproved" land. Determining the value of land without accounting for the structures, artificial modifications, or other improvements on it is far from straightforward. Appraisers would need to disentangle the natural value of the land itself from the value added by human effort, investment, or potentially nearby development. This process is not only subjective but also ripe for errors, inconsistencies, and manipulation. Politicians or government workers, motivated by the need to maximize revenue, would have a strong incentive to discover a mechanism to push these appraisals higher, claiming that much of the land's value is technically "unimproved" and thus taxable under the LVT.
As just one illustrative example, tax assessors could, for instance, argue that farmland made fertile by decades of manmade irrigation is now part of the land’s "natural" value, thereby expanding the taxable base.
A sufficiently carefully designed LVT could help to mitigate these issues, for example by severely restricting the discretion that government workers have over the appraisal process, and by requiring that neutral third parties review all procedures to ensure that estimates are unbiased and fair. However, in light of some of the previous arguments that I have given in this essay—particularly the fact that an LVT would require a complex appraisal system to avoid disincentivizing the discovery of new ways to use land productively—it seems very difficult to create a system that would be free from manipulation. Therefore, it seems very hard to be confident that implementing an LVT would have the advertised effect of creating no new disincentives for land development.
An LVT is unlikely to replace many existing taxes
Given the political incentives involved, and the fact that a land value tax has an inherently small tax base, the LVT is unlikely to fully replace existing taxes, such as income, sales, or property taxes. Instead, it would likely be added on top of these existing revenue streams. Governments are typically reluctant to eliminate major sources of revenue, especially those that have been entrenched for decades. As a result, the introduction of an LVT would likely not represent a clean substitution but rather an additional layer of taxation.
This significantly undermines one of the core arguments in favor of the LVT: its potential to increase economic efficiency. The theoretical benefit that an LVT could reduce deadweight losses is contingent on it replacing less efficient taxes that distort economic activity. However, if the LVT mostly just supplements existing taxes, its efficiency gains would be muted, if they even exist at all. Businesses and individuals would still face the distortions caused by income and sales taxes, while also shouldering the added burden of the LVT. In such a scenario, the tax system as a whole could become more complex and less efficient, negating many of the theoretical advantages proponents claim for the LVT.
Disruptions under the LVT
The precedent set by a full LVT
Another major issue is that a full or near-full land value tax would likely establish a troubling precedent by signaling that the government has the appetite to effectively confiscate an additional category of assets that people have already acquired long ago through their labor and purchases.
The concern here—which, to be clear, is not unique to the LVT—is that the introduction of an LVT set at a high rate (especially near 100%) would likely erode confidence in property rights, discouraging individuals and businesses from engaging in wealth creation and long-term investment, as they think their wealth could one day be seized, just as easily as the LVT was imposed.
To elaborate, people currently operate under the assumption that the government will not arbitrarily take away certain types of property they have legally acquired. This assumption is foundational to economic planning and investment. For instance, individuals buy stocks, businesses invest in capital goods like machinery, and developers improve real estate—all with the expectation that they will retain most of the value of their assets and any future returns from them. This confidence in the protection of property rights encourages entrepreneurship, innovation, and economic growth.
However, people are generally sensitive to any indication that this assumption may no longer hold in the future. If a government suddenly and unexpectedly began taxing the full rental value of unimproved land—an asset previously considered part of an individual's property—it would likely send a signal that property rights are less secure than they were believed to be.
Even if the government explicitly frames the policy as a unique case that applies only to the unimproved value of land, many people would view this as a convenient post-hoc justification for changing the rules. This is because, for much of history, the value of unimproved land has been treated as a legitimate part of private property, and this is particularly true in the United States compared to other countries. Indeed, many people in the US have long held that the land they own is a core part of the concept of private property. Abruptly revoking this understanding would be perceived as a modification of the government’s prior commitments to protecting property rights.
This perception matters because it leads people to rationally update their expectations about the government's future behavior. If the government can justify taxing away the full rental value of unimproved land today, what assurance is there that it won’t expand its confiscatory policies in the future? The worry here is that such a shift in policy could make people fear that other forms of easily-taxable property—such as capital goods or financial investments—might also be targeted in the future, albeit with different excuses offered by the government for why they reneged on what was perceived as their previous commitments. Even if no such additional policies are planned, the uncertainty created by the introduction of an LVT could discourage individuals from acquiring or developing assets that they think might be confiscated from them in the future, thereby reducing overall economic productivity and wealth creation.
Furthermore, this precedent would likely disproportionately affect perceptions regarding permanent assets that are easier to confiscate, like durable physical capital, while leaving more temporary or ephemeral goods like consumption goods relatively unaffected. This seems likely to shift people's financial habits towards higher levels of consumption at the expense of savings and investment. Under standard models of economic growth, such a shift would have the effect of reducing long-term prosperity.
An LVT would massively disrupt millions of people's long-term plans
Beyond setting a harmful precedent that could influence people's future behavior, a land value tax also creates a major disruption to people's current financial plans, particularly for those who have spent decades developing strategies to preserve their wealth. Millions of individuals and families have purchased land with the understanding that its value would remain secure and that it would not be subject to confiscatory taxation. The introduction of a full LVT fundamentally alters this assumption, effectively pulling the rug out from under those who relied on the previous system when making long-term financial decisions.
This disruption is not simply a matter of fairness—I am not simply saying that it is unfair that the LVT takes money from some people and redistributes it to other people. Almost every government policy has both winners and losers, and I am not merely saying that since this policy has losers too, it should therefore be avoided. Instead, my core argument here is that this sudden shift is economically inefficient, as it forces people to spend time and resources adapting to new circumstances unnecessarily.
The scale of such a disruption would be enormous. In the United States, tens of millions of people own significant amounts of land—whether as part of a retirement strategy, for generational wealth preservation, or as an asset to be used for future financial stability. These people spent potentially thousands of hours of their life building a sound financial strategy to provide for themselves and their children, and would see the fruits of their efforts substantially dissipate in light of a burdensome LVT.
For example, retirees who bought land years ago often rely on its value as a key part of their retirement strategy, whether to sell it in the future or to pass it on to their heirs. An LVT forces them to suddenly adapt to an entirely new environment, where the land they own is no longer a stable or predictable asset but instead becomes an ongoing financial liability due to the recurring tax burden.
This abrupt transition seems likely to be quite costly, both on an individual and a societal level. Individuals who previously planned to use their land for wealth preservation would now have to scramble to find alternative strategies. For elderly retirees, this shift would be particularly harmful to their economic welfare, as these people typically have less cognitive flexibility to adapt to abrupt changes in their financial environment.
The purported effect of an LVT on unproductive land speculation seems exaggerated
One of the central arguments made by proponents of the land value tax is that it would discourage individuals from holding onto land in anticipation of its value appreciating over time, rather than putting the land to productive use. The idea is that by taxing the unimproved value of land, the LVT would eliminate the financial incentive to keep land idle and force landowners to either develop it or sell it to someone who will.
However, this argument depends on a questionable model of how land speculation works. Specifically, it assumes that pure land speculation—simply holding onto land and doing nothing with it—is more profitable than selling the land to a developer and reinvesting the proceeds elsewhere. This assumption strikes me as dubious.
In reality, the opportunity cost of holding idle land is not insignificant. When a landowner holds onto undeveloped land, they forgo the potential income they could have earned by selling it and investing the money into other productive assets, such as stocks, bonds, or real estate developments elsewhere. Economic theory suggests that rational landowners would compare the expected appreciation of their land to the returns they could earn from reinvesting their capital, and in most cases, holding idle land for an extended period of time would likely not be the most profitable option.
Even in cases where land is held idle by developers or investors, it is unclear that speculation is inherently harmful or inefficient in an economic sense. Land speculation often involves anticipating future trends in development, infrastructure, or zoning, and holding land can sometimes be a rational way to align its use with long-term economic needs. For example, an investor who buys land near a growing city may be waiting for the right moment to develop it, ensuring that the land's use aligns with future demand. The act of holding land in such scenarios could be seen as part of a broader rational economic process, rather than as an inefficiency that needs to be corrected.
Moreover, there is often a simple alternative explanation for why land often appears to be held idle even when regulations allow the owners to sell it to developers. This explanation comes down to sentimental attachment.
Many landowners may simply have a deep emotional connection to their land, which makes them reluctant to sell, even if doing so might be financially advantageous. For example, someone who has inherited land that has been in their family for generations may view it as a legacy or a symbol of their heritage, rather than as a purely financial asset. In such cases, the decision to hold onto the land is driven not by speculative motives but by personal values that outweigh financial considerations.
This explanation strikes me as more plausible in many cases than the speculative model assumed by LVT supporters. Unlike professional developers or large corporations, individual landowners with sentimental ties to their property are not necessarily looking to maximize profit. Therefore, taxing the unimproved value of their land through an LVT would not necessarily compel them to sell or develop it. Instead, it might simply place an additional financial burden on individuals who already have strong personal reasons for holding onto their land, doing little to incentivize the creation of additional housing developments.
Final words
While I spent this entire post critiquing it, I'd like to reiterate that I don’t think the land value tax is entirely without merit. While the arguments I’ve outlined above personally make me feel that the LVT is far less appealing than many of its proponents claim, this doesn’t mean the tax is necessarily worse than other alternatives, such as corporate income taxes or wealth taxes, which also come with their own serious drawbacks.
In my view, the LVT should be seen as just one flawed tool among many that governments can use to raise revenue. It may well be less flawed than many other tax policies, but that doesn’t make it very good by itself. My point is simply that its limitations and practical challenges mean that it is far from the panacea its strongest advocates make it out to be.
- ^
The 13% estimate is based on the World Bank’s The Changing Wealth of Nations 2021 report, which accounts for urban land as part of "produced capital" rather than "natural capital." Specifically, urban land is valued as 24% of the produced capital stock (machinery, equipment, and structures) and is added to the value of natural capital (e.g., forests, minerals, agricultural land) to estimate the total wealth that a land value tax would target. Combined, these components represent approximately 13% of the total global wealth of $1,152,005 trillion.
It is worth noting that a previous version of this post incorrectly stated that only 6% of global wealth fell under the scope of an LVT. This misunderstanding stemmed from an error in interpreting the World Bank’s methodology, where "natural capital" was mistakenly assumed to include all forms of land value, including urban land.
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comment by Stephen Hoskins (stephen-hoskins) · 2024-12-30T00:53:07.579Z · LW(p) · GW(p)
The World Bank Group's 'The Changing Wealth of Nations' counts the value of urban land as "produced capital", not "natural capital". Your argument that the value targeted by LVT is only 6% of global wealth is therefore wrong, as are all arguments that are downstream of it.
From 'The Changing Wealth of Nations 2021', page 28: "Produced capital and urban land: machinery, buildings, equipment, intangible wealth such as intellectual property and mineral exploration, and residential and nonresidential urban land. (For the sake of brevity, the term produced capital is used to include produced capital and urban land.)"
Replies from: matthew-barnett↑ comment by Matthew Barnett (matthew-barnett) · 2024-12-30T03:29:37.845Z · LW(p) · GW(p)
Thanks for the correction. I've now modified the post to cite the World Bank as estimating the true fraction of wealth targeted by an LVT at 13%, which reflects my new understanding of their accounting methodology.
Since 13% is over twice 6%, this significantly updates me on the viability of a land value tax, and its ability to replace other taxes. I weakened my language in the post to reflect this personal update.
That said, nearly all of the arguments I made in the post remain valid regardless of this specific 13% estimate. Additionally, I expect this figure would be significantly revised downward in practice. This is because the tax base for a naive implementation of the LVT would need to be substantially reduced in order to address and eliminate the economic distortions that such a straightforward version of the tax would create. However, I want to emphasize that your comment still provides an important correction.
My revised figure comes from the following explanation given in their report. From 'The Changing Wealth of Nations 2021', page 438:
Drawing on Kunte et al. (1998), urban land is valued as a fixed proportion of the value of physical capital. Ideally, this proportion would be country specific. In practice, detailed national balance sheet information with which to compute these ratios was not available. Thus, as in Kunte et al (1998), a constant proportion equal to 24 percent is assumed; therefore the value of urban land is estimated as 24 percent of produced capital stock (machinery, equipment, and structures) in a given year.
To ensure transparency, I will detail the calculations I used to arrive at this figure below:
- Total global wealth: $1,152,005 trillion
- Natural capital: $64,542 trillion
- Produced capital: $359,267 trillion
- Human capital: $732,179 trillion
- Urban land: Calculated as 24% of produced capital, which is 0.24 × $359,267 trillion = $86,224.08 trillion
Adding natural capital and urban land together gives:
$64,542 trillion + $86,224.08 trillion = $150,766.08 trillion
To calculate the fraction of total wealth represented by natural capital and urban land, we divide this sum by total wealth:
$150,766.08 trillion ÷ $1,152,005 trillion ≈ 0.1309 (or about 13%)
Ideally, I would prefer to rely on an alternative authoritative source to confirm or refine this analysis. However, I was unable to find another suitable source with comparable authority and detail. For this reason, I will continue to use the World Bank's figures for now, despite the limitations in their methodology.
Replies from: stephen-hoskins↑ comment by Stephen Hoskins (stephen-hoskins) · 2024-12-30T05:28:24.973Z · LW(p) · GW(p)
Thanks, I appreciate the update.
13% of total wealth isn't anything to shrug off, if you ask me. Especially given that cuts to other, more distortionary taxes, is likely to flow through into increased land rents by some positive amount. (See intra-Georgist debates around EBCOR/ATCOR).
comment by ryan_greenblatt · 2024-12-29T20:06:07.166Z · LW(p) · GW(p)
(Inexpert speculation, please forgive my errors.)
I think I basically agree with the bottom line here, but I think one point seems a bit off to me.
Another major issue is that a full or near-full land value tax would likely establish a troubling precedent by signaling that the government has the appetite to effectively confiscate an additional category of assets that people have already acquired long ago through their labor and purchases.
[...]
Beyond setting a harmful precedent that could influence people's future behavior, a land value tax also creates a major disruption to people's current financial plans, particularly for those who have spent decades developing strategies to preserve their wealth.
I agree this applies if the land value tax operates via the government effectively owning all land from now on (e.g. via charging annual rent proportional to unimproved value or in principle the government could do a one time tax equivalent to land value and then tax increases in value). Another way to put this is that this version of an LVT is effectively the same as doing a 100% one time capital levy on a particular type of asset and has the corresponding issues that capital levies have as well as increasing variance via just targeting one type of asset.
One proposal for (partially) getting around this issue is to say that the government owns increases in land value from the time the LVT is introduced, but does not tax existing land value. Precisely, suppose your land is currently worth $1 million. If your land would stay the same value, you pay nothing. If the land appreciates to being worth $1.1 million, you have to pay the government $0.1 million that year. (Or alternatively, the government will charge rent for that $0.1 million share it "owns" ongoingly.) With this approach, it's important for the government to give money back if land depreciates to avoid disincentivizing variance (similar to the sort of proposal discussed here [LW · GW]).
(I also think that a LVT should be more like 80% than 100%, but I've used 100% in the numbers above for simplicity.)
Of course, this means the LVT brings in even less revenue in the short term if the tax is implemented in a rental style. If land appreciates at 4% per year on average, then in 30 years[1], the government will own about 70% of land by value via this type of LVT, so it shouldn't take that long before this is equivalent to the government owning unimproved land value. (I think you'd probably want to gradually increase the tax after testing it out for a bit to reduce disruption.)
If we imagine that the goverment directly charges for increases in land value (or sells off the rental rights to get the revenue immediately), then this means government revenue increases by total_land_value * appreciation * LVT_rate which is perhaps (for the US) $23 trillion * 4% * 80% = $0.7 trillion. Current tax revenues are about $4.5 trillion in the US, so this would be about 15% of revenue which isn't that bad: you certainly still need other taxes, but you can displace a substantial amount.
Ok, but isn't this still a bad precedent and disruptive, just to a lesser extent? After all, people were expecting that they would get the appreciation in land value and the government is taking that. I think it sets no more of a bad precendent and is no more disruptive than increasing income or capital gains tax (analogously, people were expecting to see returns on their investment in education or their capital investments). Quantitatively, there is something different about taxing a certain type of appreciation at a high rate (e.g. 80%) rather than increasing taxes more marginally, but it doesn't seem that bad.
I think this type of land value tax where you tax just appreciation seems basically strictly better than income or capital gains taxation even for a well implemented capital gains tax. (That is, putting aside evaluation issues and assuming you can get kinda reasonable exemptions for value discovery.) It still seems bad to suddenly increase a tax to a very high amount due to disruptiveness, but certainly no worse than if you got $0.7 trillion via suddenly increasing some other tax.
I expect transformative AI prior to 30 years and generally think this makes discussion of mundane goverance much more confusing, but in this comment, I'm ignoring this. ↩︎
comment by cousin_it · 2024-12-30T01:44:27.406Z · LW(p) · GW(p)
I think I have counterarguments to some of this.
First:
This disincentive to search for new ways to use land is intrinsic to the land value tax: since a landowner does not actually create the oil on their land, but merely discovers it, the oil would be part of the land’s “unimproved value”, which is inherently subject to taxation under the LVT.
In the comments to Bryan Caplan's post, Mark Wadsworth replies:
This is feeblest argument of all. I don’t even need logic to defeat this one, I can do this with hard facts. And as a matter of hard fact, most governments operate a fairly Georgist system with oil exploration and extraction, or just about any mining activities, i.e. they auction off licences to explore and extract.
The winning bid for the licence must, by definition, be approx. equal to the rental value of the site (or the rights to do certain things at the site). And the winning bid, if calculated correctly, will leave the company with a good profit on its operations in future, and as a matter of fact, most mining companies and most oil companies make profits, end of discussion, there is no disincentive for exploration at all.
Or do you think that when Western oil companies rock up in Saudi Arabia, that the Saudis don’t make them pay every cent for the value of the land/natural resources? The Western oil companies just get to keep the additional profits made by extracting, refining, shipping the stuff.
Second:
For instance, if a developer owns multiple adjacent parcels and decides to build housing or infrastructure on one of them, the value of the undeveloped parcels will rise due to their proximity to the improvements. As a result, the developer faces higher taxes on the remaining undeveloped land, making development less financially appealing in the first place.
Why do we want to make it easy for developers to hold onto unimproved land as it gets more valuable? Isn't it in society's interest that someone else gets that land and builds improvements on it?
Third:
Unlike professional developers or large corporations, individual landowners with sentimental ties to their property are not necessarily looking to maximize profit. Therefore, taxing the unimproved value of their land through an LVT would not necessarily compel them to sell or develop it. Instead, it might simply place an additional financial burden on individuals who already have strong personal reasons for holding onto their land, doing little to incentivize the creation of additional housing developments.
If society doesn't get to use that land, at least it'll get more tax money for it. And on the margin some land will be freed up.
All of that said, I think the real blocker to LVT is that the landowner lobby will never allow it, and will fight tooth and nail to repeal it if passed. The only way it could stick is if a sufficiently "red" government got power for a long time, but that's a big ask. Making construction easier is a smaller and more realistic ask, it would give people a lot of the benefits at a fraction of the cost.
Replies from: matthew-barnett, matthew-barnett↑ comment by Matthew Barnett (matthew-barnett) · 2024-12-30T02:16:58.759Z · LW(p) · GW(p)
Here you aren't just making an argument against LVT. You're making a more general argument for keeping housing prices high, and maybe even rising (because people might count on that). But high and rising housing prices make lots of people homeless, and the threat of homelessness plays a big role in propping up these prices. So in effect, many people's retirement plans depend on keeping many other people homeless, and fixing that (by LVT or otherwise) is deemed too disruptive. This does have a certain logic to it, but also it sounds like a bad equilibrium.
I agree this argument could be generalized in the way you suggest, but I want to distinguish between,
- Keeping housing prices artificially high by maintaining zoning regulations that act as a barrier to economic growth, in particular by restricting the development of new housing that would drive down the price of existing housing if it were allowed to be constructed.
- Keeping the value of property held in land high by not confiscating the ~full rental value of land from people.
While I agree the first policy "does have a certain logic to it", it also seems more straightforwardly bad than the second approach since it more directly makes society poorer in order to maintain existing people's wealth. Moreover, abandoning the first policy does not appear to involve reneging on prior commitments much, unless you interpret local governments as "committing" to keep restrictive zoning regulations for an entire community indefinitely. Even if people indeed interpret governments as making such commitments, I assume most people more strongly interpret the government as making more explicit commitments not to suddenly confiscate people's property.
I want to emphasize this distinction because a key element of my argument is that I am not relying on a "fairness" objection to LVT in that part of the post. My point is not about whether imposing an LVT would be unfair to people who expected it to never happen, and purchased land under that assumption. If fairness were my only argument, I agree that your response would weaken my position. However, my argument in that section focuses instead on the inefficiency that comes from forcing people to adapt to new economic circumstances unnecessarily.
Here's why the distinction matters: if we were to abandon restrictive zoning policies and allow more housing to be built, it’s similarly true that many people would face costs as they adapt to the resulting changes. However, this disruption seems like it would likely be offset—more than adequately—by the significant economic growth and welfare gains that would follow from increasing the housing supply. In contrast, adopting a land value tax would force a sudden and large disruption, but without many apparent corresponding benefits to justify these costs. This point becomes clearer if we accept the argument that LVT operates essentially as a zero-sum wealth transfer. In that case, it’s highly questionable whether the benefits of implementing such a tax would outweigh the harm caused by the forced adaptation.
Replies from: cousin_it↑ comment by Matthew Barnett (matthew-barnett) · 2024-12-30T04:11:35.414Z · LW(p) · GW(p)
In regards to this argument,
And as a matter of hard fact, most governments operate a fairly Georgist system with oil exploration and extraction, or just about any mining activities, i.e. they auction off licences to explore and extract.
The winning bid for the licence must, by definition, be approx. equal to the rental value of the site (or the rights to do certain things at the site). And the winning bid, if calculated correctly, will leave the company with a good profit on its operations in future, and as a matter of fact, most mining companies and most oil companies make profits, end of discussion, there is no disincentive for exploration at all.
Or do you think that when Western oil companies rock up in Saudi Arabia, that the Saudis don’t make them pay every cent for the value of the land/natural resources? The Western oil companies just get to keep the additional profits made by extracting, refining, shipping the stuff.
I may be misunderstanding their argument, but it seems to be overstated and overlooks some obvious counterpoints. For one, the fact that new oil discoveries continue to occur in the modern world does not strongly support the claim that existing policies have no disincentive effect. Taxes and certain poorly-designed property rights structures typically reduce economic activity rather than eliminating it entirely.
In other words, disincentives usually result in diminished productivity, not a complete halt to it. Applying this reasoning here, I would frame my argument as implying that under a land value tax, oil and other valuable resources, such as minerals, would still be discovered. However, the frequency of these discoveries would likely be lower compared to the counterfactual because the incentive to invest effort and resources into the discovery process would be weakened as a result of the tax.
Secondly, and more importantly, countries like Saudi Arabia (and other Gulf states) presumably have strong incentives to uncover natural oil reserves for essentially the same reason that a private landowner would: discovering oil makes them wealthier. The key difference between our current system (as described in the comment) and a hypothetical system under a naive land value tax (as described in the post) lies in how these incentives and abilities would function.
Under the current system, governments are free to invest resources in surveying and discovering oil reserves on government-owned property. In contrast, under a naive LVT system, the government would lack the legal ability to survey for oil on privately owned land without the landowner’s permission, even though they'd receive the rental income from this private property via the tax. At the same time, such an LVT would also undermine the incentives for private landowners themselves to search for oil, as the economic payoff for their efforts would be diminished. This means that the very economic actors that could give the government permission to survey the land would have no incentive to let the government do so.
This creates a scenario where neither the government nor private landowners are properly incentivized to discover oil, which seems clearly worse than the present system—assuming my interpretation of the current situation is correct.
Of course, the government could in theory compensate private landowners for discovery efforts, mitigating this flaw in the LVT, but then this just seems like the "patch" to the naive LVT that I talked about in the post.
comment by Alexander Gietelink Oldenziel (alexander-gietelink-oldenziel) · 2024-12-29T15:25:26.417Z · LW(p) · GW(p)
This post changed my mind.
comment by LGS · 2024-12-30T20:13:33.827Z · LW(p) · GW(p)
Thanks for this post. A few comments:
- The concern about new uses of land is real, but very limited compared to the inefficiencies of most other taxes. It is of course true that if the government essentially owns the land to rent it out, the government should pay for the exploration for untapped oil reserves! The government would hire the oil companies to explore. It is also true that the government would do so less efficiently than the private market. But this is small potatoes compared to the inefficiency of nearly every other tax.
- It is true that a developer owning multiple parcels of land would have lower incentives to improve any one of them, but this sounds like a very small effect to me, because most developers own a very (very) small part of the city's land! In any case, the natural remedy here is for the government to subsidize all improvements on land, since improvements have positive externalities. Note that this is the opposite of the current property tax regime in most places (where improving the land makes you pay tax). In fact, replacing property taxes with land value taxes would almost surely incentivize developers to develop, even if they own multiple parcels of land. In other words, your objection already applies to the current world (with property taxes) and arguably applies less to the hypothetical world with land value taxes.
- Estimates for the land value proportion of US GDP run significantly higher than the World Bank estimate, from what I understand. Land is a really big deal in the US economy.
- "The government has incentives to inflate their estimates of the value of unimproved land" sure, the government always has incentives towards some inefficiencies; this objection applies to all government action. We have to try it and see how bad this is in practice.
- The disruption and confidence-in-property-rights effects are potentially real, but mostly apply to sudden, high LVT. Most people's investments already account for some amount of "regulatory risk", the risk that the government changes the rules (e.g. with regards to capital gains taxes or property taxes). A move like "replace all property taxes with LVT" would be well within the expected risk. I agree that a sudden near-100% LVT would be too confidence-shaking; but even then, the question is whether people would view this as "government changes rules arbitrarily" or "government is run by competent economists now and changes rules suddenly but in accordance with economic theory". A bipartisan shift towards economic literacy would lead people towards the latter conclusion, which means less panic about confiscated investments and more preemptive panic about (e.g.) expected Pigouvian taxes (this is a good thing). But a partisan change enacted when one party has majority and undone by the other party would lead people towards the former conclusion (with terrible consequences). Anyway, I am a big supporter of incrementalism and avoiding sudden change.
- "The purported effect of an LVT on unproductive land speculation seems exaggerated" yes, I agree, and this always bothered me about LVT proponents.
↑ comment by Dagon · 2024-12-31T20:01:31.246Z · LW(p) · GW(p)
The disruption and confidence-in-property-rights effects are potentially real, but mostly apply to sudden, high LVT.
Well, no. It applies to sudden SIGNALING OF INTENT to a high LVT. Any move in this direction, even if nominally gradual, will immediately devalue the ownership of land. Nobody is going to believe in a long-term plan - near-future governments want the money now, and will accelerate it.
In a lot of human public-choice affairs, the slippery slope is real, and everyone knows it.
Replies from: LGS↑ comment by LGS · 2024-12-31T20:53:51.182Z · LW(p) · GW(p)
More accurately, it applies to a signalling of intent of confiscating other investments; we don't actually care if people panic about land being confiscated because buying land (rather than improving it) isn't productive in any way. (We may also want to partially redistribute resources towards the losers of the land confiscation to compensate for the lost investment -- that is, we may want to the government to buy the land rather than confiscate it, though it would be bought at lower than market prices.)
It is weird to claim that the perceived consequence of planned incrementalism is "near-future governments want the money now, and will accelerate it". The actual problem is almost certainly the opposite: near-future governments will want to cut taxes, since cutting taxes is incredibly popular, and will therefore stop or reverse the planned incremental LVT.
comment by df fd (df-fd) · 2024-12-30T10:26:33.868Z · LW(p) · GW(p)
An LVT would massively disrupt millions of people's long-term plans
this seem like a fully general argument, any law change is going to disrupt people's long term plans,
e.g. the abolishment of slavery also disrupt people's long term plans
I suppose you can argue that the magnitude is too big, put then I would assume that some period of phasing in would help.
you can argue that the short term cost is more than the long term gain but I am not convinced.
The government has incentives to inflate their estimates of the value of unimproved land
by your own logic, the government also has incentive to inflate their estimate value of income or whatever is being taxed right now?
Another major issue is that a full or near-full land value tax would likely establish a troubling precedent by signaling that the government has the appetite to effectively confiscate an additional category of assets that people have already acquired long ago through their labor and purchases.
would you still oppose it if the tax is only add to new purchase?
Replies from: matthew-barnett↑ comment by Matthew Barnett (matthew-barnett) · 2024-12-30T14:59:56.076Z · LW(p) · GW(p)
this seem like a fully general argument, any law change is going to disrupt people's long term plans,
e.g. the abolishment of slavery also disrupt people's long term plans
In this case, I was simply identifying one additional cost of the policy in question: namely that it would massively disrupt the status quo. My point is not that we should abandon a policy simply because it has costs—every policy has costs. Rather, I think we should carefully weigh the benefits of a policy against its costs to determine whether it is worth pursuing, and this is one additional non-trivial cost to consider.
My reasoning for supporting the abolition of slavery, for example, is not based on the idea that abolition has no costs at all. Instead, I believe slavery should be abolished because the benefits of abolition far outweigh those costs.
comment by Lucas Spailier (Lukher) · 2024-12-30T20:07:10.293Z · LW(p) · GW(p)
Another issue with the LVT is that it acts as an implicit tax on nearby land development.
Isn't this the whole point ? One of the main goals of LVT, as I understand it, is to prevent people from leeching off positive externalities generated by others without providing anything themselves, like a shitty apartment building that still charges high rents because of good nearby amenities/infrastructure.
The downside you mention is about how LVT would also prevent people from 'leeching off' their own positive externalities, like the Disney example. Assuming that's true, I'm not sure why that's a problem ? It seems to be the default case for everyone. A restaurant doesn't capture the full externalities from the neighborhood having a restaurant nearby, not unless it's the only restaurant around and generally not even then. A friendly neighbor doesn't capture the externality from the neighborhood having exactly one additional nice person in it. Neither of these things are realistically feasible, so why should we care that LVT would also make it unfeasible for Disney to get the full externalities from building Disney World ?
↑ comment by Matthew Barnett (matthew-barnett) · 2025-01-01T01:25:51.853Z · LW(p) · GW(p)
The downside you mention is about how LVT would also prevent people from 'leeching off' their own positive externalities, like the Disney example. Assuming that's true, I'm not sure why that's a problem ? It seems to be the default case for everyone.
The problem is that it would reduce the incentive to develop property for large developers, since their tax bill would go up if they developed adjacent land.
Whether this is a problem depends on your perspective. Personally, I would prefer that we stop making it harder and more inconvenient to build housing and develop land in the United States. Housing scarcity is already a major issue, and I don't think we should just keep piling up disincentives to develop land and build housing unless we are being adequately compensated in other ways by doing so.
The main selling point of the LVT is that it arguably acts similarly to a zero sum wealth transfer, in the sense of creating zero deadweight loss (in theory). This is an improvement on most taxes, which are closer to negative sum rather than zero sum. But if the LVT slows down land development even more than our current rate of development, and the only upside is that rich landowners have their wealth redistributed, then this doesn't seem that great to me. I'd much rather we focus on alternative, positive sum policies.
(To be clear, I think it's plausible that the LVT has other benefits that make up for this downside, but here I'm just explaining why I think your objection to my argument is weak. I am not saying that the LVT is definitely bad.)
comment by philh · 2024-12-29T19:55:27.989Z · LW(p) · GW(p)
For instance, if a developer owns multiple adjacent parcels and decides to build housing or infrastructure on one of them, the value of the undeveloped parcels will rise due to their proximity to the improvements.
An implementation detail of LVT would be, how do we decide what counts as once parcel and what counts as two? Depending how we answer that, I could easily imagine LVT causing bad incentives. (Which isn't a knock-down, it doesn't feel worse than the kind of practical difficulty any tax has.)
I wonder if it might not be better to just get rid of the idea of "improvements to your own land don't get taxed". Then we figure out the value of land in fairly broad strokes ("in this borough, it's worth £x per square meter") and just tax based on how much land you own in each price region.
Disadvantage is that improvements to your own land get taxed. I guess most of the time the tax is fairly low, because that tax is distributed over all the land in the price region.
Advantage is less implementation complexity. No need to figure out "how much is this specific land worth without improvements". (Suppose there's a popular theme park here. Nearby land probably gets more valuable. When you want to assess the value of the land under the theme park, as if there was no theme park there, how do you do that?)
Asking the question for "land in this general area" seems, still hard, but easier. (Lars Doucet was on the Complex Systems podcast recently, and said one way is to look at sales that were shortly followed by demolition. "This person paid $1m for the land and then an extra $500k to demolish what was there, so the land itself was probably worth $1.5m.")
comment by Yair Halberstadt (yair-halberstadt) · 2024-12-29T19:04:56.283Z · LW(p) · GW(p)
My assumption for an LVT is that the tax is based on the value of the land sans any improvements the landowner has made to the land. This would thus exclude from the tax an increase in value due to you discovering oil or you building nearby, but include in the tax any increase in value due to your neighbours discovering oil or building on their land.
That said I don't know how this would be calculated in practice, especially once we get to more complicated cases (a business I'm a minority owner of discovers oil on my land, I split my plot of land into 2 and sell them to 2 different people, etc.).
On the other hand, most taxes have all sorts edge cases too, and whilst they're problematic, we muddle through them. I doubt that this couldn't be muddled through in a similar way.
comment by deepthoughtlife · 2024-12-30T05:39:31.329Z · LW(p) · GW(p)
Apparently the very subject coming up led to me writing a few paragraphs about the problems of a land value tax before I even started reading it. (A fraction of the things in parenthesis were put in later to elaborate a point.)
There's nothing wrong with replacing current property taxes with equivalent (dollar value) taxes that only apply to the value of the land itself (this would be good to avoid penalizing improving your own land), but the land value tax (aka Georgeism) is awful because of what its proponents want to do with it. Effectively, they want to confiscate literally all of the value of people's land. This is hugely distortionary versus other forms of property, but that isn't even the real problem.
The real problem is that people don't want to live lives where they literally can't own their own home, can't plan for where they will live in the future, and can be kicked out at any time easily just because someone likes the idea of claiming their land became valuable. This turns all homeowners into renters. There are in many places (such as California) very distortionary laws on property tax because people hate the idea of their land being confiscated through taxes. There are also very many laws on making it hard to kick out renters because renters hate being being kicked out too. Stability is important and many people currently pay massive premiums to not rent (including taking out massive 30 year loans on a place where they often don't even plan to live for half that long). Also, being forced to move at an inconvenient time is very expensive and has a hell of a lot of deadweight loss both economically and personally. (People also hate eminent domain.)
Of lesser but not no importance is fact that their taxes can go up to ridiculously high levels just because someone else built something valuable nearby will cause present day nimbyism to look very nice and kind (though it is kind of funny that people will likely switch what kind of nimbyism they support as well).
So, does your post bring up what I think are the problems with an land value tax? Yes, though I somewhat disagree with some of the emphasis.
Searching for new uses of land is pretty important especially over time, but we don't need new uses for things to work right now whereas the disruptions to people's lives would make things unworkable right now, and a lot of searching for new uses of land is done by people who do not currently own said land.
Implicitly taxing improvements to nearby land is obviously related to my point on nimbyism so we agree there, though it is interesting to note that seem to prefer talking about the internal version why I mostly reference the political version. The internal issue could obviously be 'fixed' by simply consolidating lots, but the political cannot without completely destroying the idea of individual ownership.
Your statements about the tax base narrowing issue is largely correct, but I would like to emphasize a different point of agreement that supporters seem to see it as simple, elegant, and easy but each patch makes it more complicated, kludgy, and difficult. I think that the very idea of evaluating the value of the land itself as separate from improvements actually starts out pretty difficult, so the increase in difficulty is a huge problem. Any incorrect overvaluation makes land worse than useless under this system! A system where a lot of land is useless very obviously leads to a lot of unused valuable land... which is exactly why people are currently complaining about speculation in land, but worse! (This is also deadweight loss.)
You don't go far enough when decrying the effect on people's confidence in the government, because it isn't just a confidence thing. Confiscating people's property without extremely good cause is one of the primary signs of living in a country that's either dirt poor, or right about to be, and will definitely stay that way (except in some rare cases where it only leads to massive famines, death, and stagnation rather than becoming poorer monetarily at first). It is also massively immoral.
The problem with your section on disrupting long-term plans is that you emphasize only the immediate problem of the transition, but don't mention that it also prevents the creation of new long term plans for a stable life unless you are willing to live a very bad life compared to how you could otherwise live. A full land value tax is therefore extremely dystopian.
Luckily, the proponents aren't currently finding much luck in their desired tax actually happening, and I hope it stays that way.
comment by romeostevensit · 2024-12-29T17:58:45.245Z · LW(p) · GW(p)
Post does not include the word auction, which is a key aspect of how LVT works to not have some of these downsides.
Replies from: matthew-barnett, philh↑ comment by Matthew Barnett (matthew-barnett) · 2024-12-29T18:12:09.191Z · LW(p) · GW(p)
It may be worth elaborating on how you think auctions work to mitigate the issues I've identified. If you are referring to either a Vickrey auction or a Harberger tax system, Bryan Caplan has provided arguments for why these proposals do not seem to solve the issue regarding the disincentive to discover new uses for land:
Replies from: yair-halberstadt, romeostevensitI can explain our argument with a simple example. Clever Georgists propose a regime where property owners self-assess the value of their property, subject to the constraint that owners must sell their property to anyone who offers that self-assessed value. Now suppose you own a vacant lot with oil underneath; the present value of the oil minus the cost of extraction equals $1M. How will you self-assess? As long as the value of your land is public information, you cannot safely self-assess at anything less than its full value of $1M. So you self-assess at $1M, pay the Georgist tax (say 99%), and pump the oil anyway, right?
There’s just one problem: While the Georgist tax has no effect on the incentive to pump discovered oil, it has a devastating effect on the incentive to discover oil in the first place. Suppose you could find a $1M well by spending $900k on exploration. With a 99% Georgist tax, your expected profits are negative $890k. (.01*$1M-$900k=-$890k)
↑ comment by Yair Halberstadt (yair-halberstadt) · 2024-12-29T19:10:30.390Z · LW(p) · GW(p)
I think Harberger taxes are inherently incompatible with Georgian taxes as Georgian taxes want to tax only the land and Harberger taxes inherently have to tax everything.
That said see my somewhat maverickal attempt to combine them here: https://www.lesswrong.com/posts/MjBQ8S5tLNGLizACB/combining-the-best-of-georgian-and-harberger-taxes [LW · GW]. Under that proposal we would deal with this case by saying that if anyone outbid me for the land they would not be allowed to extract the oil until the arranged a separate deal with me, but could use the land for any other purpose.
↑ comment by romeostevensit · 2024-12-30T06:28:03.993Z · LW(p) · GW(p)
I am very confused why the tax is 99% in this example.
Replies from: matthew-barnett↑ comment by Matthew Barnett (matthew-barnett) · 2024-12-30T13:44:57.431Z · LW(p) · GW(p)
It's common for Georgists to propose a near-100% tax on unimproved land. One can propose a smaller tax to mitigate these disincentives, but that simultaneously shrinks the revenue one would get from the tax, making the proposal less meaningful.
↑ comment by philh · 2024-12-29T19:30:38.198Z · LW(p) · GW(p)
I've read/listened about LVT many times and I don't remember "auctions are a key aspect of this" ever coming up. E.g. the four posts by Lars Doucet on ACX only mention the word twice, in one paragraph that doesn't make that claim:
Land Price or Land Value is how much it costs to buy a piece of land. Full Market Value, however, is specifically the land price under "fair" and open market conditions. What are "unfair" conditions? I mean, your dad could sell you a valuable property for $1 as an obvious gift, but if he put it on the open market, it would go for much more than that. Likewise, it's not uncommon for a property that's been foreclosed on and hastily auctioned off to be re-listed publicly by the auction winner for a higher price.