AHC: Have a land value tax replace the income tax as the main source of revenue for a nation.

So is there an actual possibility for the LVT to become one of the main sources of revenue? Maybe a KMT led China could make it the main source of revenue, Sun Yat-Sen was a noted fan of Henry George after he supposedly saw the improvements the LVT did to Tsingtao, a German held port.
 

DougM

Donor
Not sure why you can’t make this work. Many states use property tax (land) as a huge source of income.
 

Puzzle

Donor
Wouldn’t it diminish the incentive to improve your property unless it was structured like a capital gains tax?
 
I think it was Šimašius or someone who said that "the only tax I would be willing to accept is a land value tax". It was definitely someone from the LRLS.

The point is that this idea is not considered too out there in my country.
 

Anderman

Donor
I doubt that a modern state can be funded with a land value tax as the main source. The value from land comes from what revenue somebody can earn, like the rent from apartments etc. So one effect is that said rent will go up with all its social implacations....
 
Wouldn’t it diminish the incentive to improve your property unless it was structured like a capital gains tax?
Quite the opposite - it’s specifically only on the value of the underlying land, not anything built on it. So no matter how much you improve the property, the tax stays the same.
I doubt that a modern state can be funded with a land value tax as the main source. The value from land comes from what revenue somebody can earn, like the rent from apartments etc. So one effect is that said rent will go up with all its social implacations....
Well you could make the exact same argument about income tax - you tax labour you make it more expensive. There’s good reason to think a land vale tax would be less distortionary than most other usual taxes, and indeed that was one of the two big arguments for it.
 

Anderman

Donor
Quite the opposite - it’s specifically only on the value of the underlying land, not anything built on it. So no matter how much you improve the property, the tax stays the same.
Well you could make the exact same argument about income tax - you tax labour you make it more expensive. There’s good reason to think a land vale tax would be less distortionary than most other usual taxes, and indeed that was one of the two big arguments for it.

The land has value because you could do something with it. Like building houses or factories on it. Land in the middle of nowhere has no or little value and because of this it would generate only little or no taxes.
Determine the value of the land is a problem of its own. Here in Germany our Verfassungsgericht declared the method of evaluations for the Grundsteuer (which is a important tax of towns) unconstitutional and it looks the new method is rumored to share that fate.
No tax is neutral and make thinks more expansive but income tax is broader then a land value tax. It taxes labour but also interest, rent , dividends etc...
I don´t say you can´t have a land value tax but it will not be the main scoure of income for a modern state.
 

BigBlueBox

Banned
I doubt that a modern state can be funded with a land value tax as the main source. The value from land comes from what revenue somebody can earn, like the rent from apartments etc. So one effect is that said rent will go up with all its social implacations....
You pay the same rate on the land no matter what you do with it. An empty one acre plot would be taxed the same as a one-acre skyscraper adjacent to it. It would incentivize construction, raising the supply of housing and therefore lowering the price.
The land has value because you could do something with it. Like building houses or factories on it. Land in the middle of nowhere has no or little value and because of this it would generate only little or no taxes.
That's kind of the point. Since land "in the middle of nowhere" will be so much more affordable than land in the middle of cities, development will be spread out more instead of concentrated in a handful of big cities.
 
You pay the same rate on the land no matter what you do with it. An empty one acre plot would be taxed the same as a one-acre skyscraper adjacent to it. It would incentivize construction, raising the supply of housing and therefore lowering the price.

That's kind of the point. Since land "in the middle of nowhere" will be so much more affordable than land in the middle of cities, development will be spread out more instead of concentrated in a handful of big cities.

Fine....provided you don't have laws restricting development, and you don't need infrastructure such as roads, schools etc.

You end up with widespread development and transportation problems for people and goods; where are the workplaces going to be? How do people get there at reasonable cost?

Cities developed because all the necessary things were in one place.
 

BigBlueBox

Banned
Fine....provided you don't have laws restricting development, and you don't need infrastructure such as roads, schools etc.

You end up with widespread development and transportation problems for people and goods; where are the workplaces going to be? How do people get there at reasonable cost?

Cities developed because all the necessary things were in one place.
Land value tax is better for developing roads and schools because the people who benefit from them the most - those who own the land near the roads and schools - pay the taxes that fund them. Existing industries and workplaces would stay where they are due to inertia but new and emerging industries would be incentivized to start up in cheaper cities.
 

Anderman

Donor
You pay the same rate on the land no matter what you do with it. An empty one acre plot would be taxed the same as a one-acre skyscraper adjacent to it. It would incentivize construction, raising the supply of housing and therefore lowering the price.

That's kind of the point. Since land "in the middle of nowhere" will be so much more affordable than land in the middle of cities, development will be spread out more instead of concentrated in a handful of big cities.

My bad i understand the value part of LVT as if the value had be determined and then taxed. The problem is that land in a larger city or town will most likely will have a higher value and the owner of that land will most likely richer than the owner of land in the middle of nowhere with lower value.(If own the same area of land).
Tehe development spread out is called sprawl iirc.
 
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kernals12

Banned
A Land Value Tax might've been enough to cover all the government's spending needs during Henry George's time, before the Welfare state, when we were happy with one room school houses and unpaved roads, and when our military was tiny, but it would be woefully insufficient today.
 
A Land Value Tax might've been enough to cover all the government's spending needs during Henry George's time, before the Welfare state, when we were happy with one room school houses and unpaved roads, and when our military was tiny, but it would be woefully insufficient today.

Indeed, using the national property tax average of 1.19% and applying it to the $14 Trillion in taxable land results in ~$170 Billion. While obviously nothing to sneeze at, that is only about 5% of existing Federal revenue. Still, it does have some merits as a policy; for one, it could be used to fund the proposed GAIN Act which would provide a steep tax credit to the lower and middle classes while also making the child tax credit fully refundable too. The rationalization provided by a LVT would also directly help to reduce income inequality, as there is evidence much of the growth in that is tied to real estate. It would also combat absentee lawn ownership especially in Appalachia, which is a major barrier to economic development there.
 

kernals12

Banned
Indeed, using the national property tax average of 1.19% and applying it to the $14 Trillion in taxable land results in ~$170 Billion. While obviously nothing to sneeze at, that is only about 5% of existing Federal revenue. Still, it does have some merits as a policy; for one, it could be used to fund the proposed GAIN Act which would provide a steep tax credit to the lower and middle classes while also making the child tax credit fully refundable too. The rationalization provided by a LVT would also directly help to reduce income inequality, as there is evidence much of the growth in that is tied to real estate. It would also combat absentee lawn ownership especially in Appalachia, which is a major barrier to economic development there.
Any revenue from a federal land value tax would have to be apportioned among the states as it constitutes a direct tax on wealth.
 
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