“One of the most straightforward solutions a land tax offers is to America’s housing crisis. That crisis is caused, in part, by the failure to appropriately use valuable in-demand land for its best purpose. Millions of people want to live in New York City, Los Angeles, Washington, DC, or Seattle, but local tax regimes actually punish people for investing in their property. When people improve their property — either by adding a new room or building an entirely new structure like a multi-story apartment building, they’ll pay higher property taxes.
But this isn’t just a big-city problem. In small towns, vacant lots contribute to decline — and if there’s no valuable structure on a property, its delinquent landlords likely only pay a nominal property tax. This both lowers tax revenue and hurts neighborhood quality for everyone else.
Here’s where a land value tax can come into play.
Taxing land value means separating out what land is worth without any of the improvements sitting on it (like homes or industrial plants). Most Americans are familiar with property taxes that tax the value of their homes and the land they sit on as one. As New York University economist Arpit Gupta explains, part of what makes land taxes so attractive is that “there should be no economic inefficiency” if you are able to tax “true land rents.”
A land tax can’t disincentivize anything — land will continue to existregardless of any taxation scheme.
“Land doesn’t move,” University of Illinois economist David Albouy explained. “It doesn’t disappear — so you can lower taxes on things that do go away.””
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“Taxing land reduces the profit that comes from just owning a piece of property. Instead, you are incentivized to put that land to work. Let’s take a plot of land near Times Square. That land is so valuable, basically anything you do with it will turn a massive profit so no need to develop it for its most valuable use.
However, if a land tax were to be levied, the owner of that land would need to make sure that the property on that land was actually profitable since the government is taxing away some or all of the land rents that could be charged.”
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“beyond the political issues, there are also technical concerns: Firstly, valuing land separately from the improvements to it is not so simple, though proponents argue it can be done. Secondly, implementing a land tax right now, while fair in the medium and long term, could feel drastically unfair in the short term to property owners who paid a premium for their lots because of the value of the land only to see it depreciate in value as a new tax gets implemented.
So why is this meme becoming so popular (at least among some online communities)? Lars Doucet, a prominent land value tax proponent, explains that a big part of the reason is that for a long time the automobile made sprawling suburban development possible. That meant people could still access valuable labor markets even if they couldn’t afford to live near their jobs (as long as they were willing to suffer long commutes, that is).
“Now we’ve run out of suburbs,” Doucet argued. “We can’t push any further through expansion.”
Remote work is a new development, which could buy us some more time, since it could allow many people to live even further away from city centers, but as rents skyrocket, people are desperately searching for radical solutions to America’s housing crisis.”
https://www.vox.com/policy-and-politics/22951092/land-tax-housing-crisis