\n\n“One of the most straightforward solutions a land tax offers is to America\u2019s 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 \u2014 either by adding a new room or building an entirely new structure like a multi-story apartment building, they\u2019ll pay higher property taxes.<\/p>\n\n\n\n
But this isn\u2019t just a big-city problem. In small towns, vacant lots contribute to decline \u2014 and if there\u2019s 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.<\/p>\n\n\n\n
Here\u2019s where a land value tax can come into play.<\/p>\n\n\n\n
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<\/a>, part of what makes land taxes so attractive is that \u201cthere should be no economic inefficiency\u201d if you are able to tax \u201ctrue land rents.\u201d<\/p>\n\n\n\n A land tax can\u2019t disincentivize anything \u2014 land will continue to existregardless of any taxation scheme.<\/p>\n\n\n\n \u201cLand doesn\u2019t move,\u201d University of Illinois economist David Albouy explained. \u201cIt doesn\u2019t disappear \u2014 so you can lower taxes on things that do go away.\u201d”<\/p>\n\n\n\n …<\/p>\n\n\n\n “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\u2019s 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.<\/p>\n\n\n\n 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.” <\/p>\n\n\n\n …<\/p>\n\n\n\n “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<\/a>. 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<\/a> 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.<\/p>\n\n\n\n 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\u2019t afford to live near their jobs (as long as they were willing to suffer long commutes, that is).<\/p>\n\n\n\n \u201cNow we\u2019ve run out of suburbs,\u201d Doucet argued. \u201cWe can\u2019t push any further through expansion.\u201d<\/p>\n\n\n\n Remote work is a new development, which could buy us some more time, since it could allow many people to live even further away<\/a> from city centers, but as rents skyrocket<\/a>, people are desperately searching for radical solutions to America\u2019s housing crisis.” <\/p>\n\n\n\n