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

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.
This is the key fault that I see with what I consider a very bad idea. If you suddenly have to pay taxes on that plot of land that doesn't make any revenue, you either have to sell it, or develop it. Kiss goodbye to the environment, and make way for the world city.

In general, what this seems to amount to to me is; "We, the government, have decided that what with our overpowering greed and need to tamper with everything and everyone else, have unilaterally decided that all formerly privately owned lands, are now actually owned by us, and the former owners, who we have just now effectively reduced to tenants, now need to pay us rent on their formerly privately own lands..."

I think that in any country where this was attempted, the folks would just remove their government, rather than allow such a naked power grab.

Of course, if land that formed the homes for families was to be exempted, then people that own just their own homes and yards could actually see a drop in their taxes. OTOH, would this not lead to a never ending shell game, where land would be specifically built up to avoid the taxes in the first place?
 
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kernals12

Banned
This is the key fault that I see with what I consider a very bad idea. If you suddenly have to pay taxes on that plot of land that doesn't make any revenue, you either have to sell it, or develop it. Kiss goodbye to the environment, and make way for the world city.

In general, what this seems to amount to to me is; "We, the government, have decided that what with our overpowering greed and need to tamper with everything and everyone else, have unilaterally decided that all formerly privately owned lands, are now actually owned by us, and the former owners, who we have just now effectively reduced to tenants, now need to pay us rent on their formerly privately own lands..."

I think that in any country where this was attempted, the folks would just remove their government, rather than allow such a naked power grab.

Of course, if land that formed the homes for families was to be exempted, then people that own just their own homes and yards could actually see a drop in their taxes. OTOH, would this not lead to a never ending shell game, where land would be specifically built up to avoid the taxes in the first place?
You already have to pay property tax on that land.
 

kernals12

Banned
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.
Taiwan does have a land value tax and it only provided 8.4% of government revenue in 2010, and half of that comes from the "land value increment tax" which is essentially a capital gains tax on land value appreciation paid whenever land is sold.
 

kernals12

Banned
I'm sorry, I was under the impression that the property taxes under discussion were for lands that were undeveloped, and somehow not already paying taxes.
Under this, all else being equal, undeveloped land would pay higher property taxes and developed land would pay lower property taxes.
 
Under this, all else being equal, undeveloped land would pay higher property taxes and developed land would pay lower property taxes.
Ok, but wouldn't that, all else being equal, kind of force folks to develop their undeveloped land, because otherwise they need to pay higher taxes, and developing it actually makes it pay somehow, even if only by lowering the taxes? And thus do more harm to the environment? Or is this limited to land within a municipality?

I guess I need to read more carefully, because when I read the OP here, and followed the links to the other, earlier thread, I somehow got the impression that there was undeveloped land not currently being taxed, and the idea was that that land, would need to be taxed at a higher rate then the land that has power lines, gas lines, sewers and roads, which cost money to build and maintain, and that just didn't compute.

So, are we talking about urban blight, or that 40 patch of woods out in the middle of nowhere?:oops:
 

kernals12

Banned
Ok, but wouldn't that, all else being equal, kind of force folks to develop their undeveloped land, because otherwise they need to pay higher taxes, and developing it actually makes it pay somehow, even if only by lowering the taxes? And thus do more harm to the environment? Or is this limited to land within a municipality?

I guess I need to read more carefully, because when I read the OP here, and followed the links to the other, earlier thread, I somehow got the impression that there was undeveloped land not currently being taxed, and the idea was that that land, would need to be taxed at a higher rate then the land that has power lines, gas lines, sewers and roads, which cost money to build and maintain, and that just didn't compute.

So, are we talking about urban blight, or that 40 patch of woods out in the middle of nowhere?:oops:
It would force a more intensive use of land. It would cause cities to retreat inwards, thereby helping the environment.
 
About a third of Hong Kong's government revenue comes from selling land use rights to the highest bidder. This creates a huge incentive to restrict land sales, which leads to its soaraway housing prices, which are a major factor behind the never-ending protests. It's not the same as an LVT, but it does highlight the risks.
 
I guess I need to read more carefully, because when I read the OP here, and followed the links to the other, earlier thread, I somehow got the impression that there was undeveloped land not currently being taxed, and the idea was that that land, would need to be taxed at a higher rate then the land that has power lines, gas lines, sewers and roads, which cost money to build and maintain, and that just didn't compute.

So, are we talking about urban blight, or that 40 patch of woods out in the middle of nowhere?:oops:
Okay, you seem to have seriously misunderstood what a land value tax is somehow. I recommend reading the wikipedia article, but to provide a short and simple summary: A land value tax is a type of property tax, nothing more and nothing less. The difference--and it turns out to be a rather significant difference--is that whereas ordinary property taxes are assessed based on the combined value of the land and any "improvements" on the land, land value tax is assessed based purely on the value of the land. In other words, a skyscraper and a parking lot in the downtown of a city would have to pay the exact same amount of tax under a land value scheme, whereas under the ordinary method of assessing taxes the skyscraper would have to pay much more because of the value of the building. Both of them would pay much more in taxes than a "40 acre patch of woods out in the middle of nowhere," although the tax rate might be the same, since the value of the land underneath the woods would be much less.

There is therefore a larger incentive to develop land under a land value tax than under the ordinary method, since you will increase your revenue without correspondingly increasing your taxes. This incentive is much larger in cities, however, because the value of the land there is higher and less likely to increase merely because of your development (consider the relative value of the land under a "40 acre patch of woods" and that beneath a "40 acre subdivision"). In particular, it makes holding on to a vacant lot hoping for price appreciation much less attractive, since building something on the lot will not affect your taxes at all, unlike in the usual system, whereas it will greatly increase your revenue. But this is not because taxes would be higher in rate or absolute value for undeveloped land as opposed to developed land; they would be equal in rate and, in many circumstances, lower in absolute value for the undeveloped as opposed to the developed land (exceptions might include the undeveloped land having valuable mineral resources or being attractive for agriculture, for example, while the developed land is in a declining city).
 
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....

Rent is a source of income for some people so raising income taxes raises rents. Does anyone actually say that?

Also a land value tax can literally be anything from 0% to 1000000% of the value of the land so talking about what it can or cannot substitute is pointless.

The benefit of land value tax is that land is fixed quantity so a high rate of tax won't result in a reduced sale of land.

Now because a land value tax needs people to assess the value of the land, and probably requires setting up a system to buy and sell land that doesn't give rights to the property on the land (quite a strange concept, but otherwise you cannot assess the land value sans improvements and its end up being a property tax which is bad because property is not a fixed good and taxing it like taxing income and everything else will reduce the supply produced) in order to properly estimate the value it will have a minimum administration cost. So it's more efficient if land value tax is a substantial proportion of government revenue because the cost of analysing the land is fixed regardless of rate of tax.
 

Anderman

Donor
Rent is a source of income for some people so raising income taxes raises rents. Does anyone actually say that?
Every economist who knows what he is talking about. But that is a general feature of cost and taxes are a form of cost income tax, or a lvt doesn´t matter. You want to regain this taxes.

Also a land value tax can literally be anything from 0% to 1000000% of the value of the land so talking about what it can or cannot substitute is pointless.

The benefit of land value tax is that land is fixed quantity so a high rate of tax won't result in a reduced sale of land.

In theory there is no limit of how high a tax rate can be. But to high taxes can lead to revolutions ;-) At the moment when people losing their homes because they can no longer afford the LVT times are getting interesting.

Now because a land value tax needs people to assess the value of the land, and probably requires setting up a system to buy and sell land that doesn't give rights to the property on the land (quite a strange concept, but otherwise you cannot assess the land value sans improvements and its end up being a property tax which is bad because property is not a fixed good and taxing it like taxing income and everything else will reduce the supply produced) in order to properly estimate the value it will have a minimum administration cost. So it's more efficient if land value tax is a substantial proportion of government revenue because the cost of analysing the land is fixed regardless of rate of tax.

Assess the value could be difficult how are you doing for land in the middle of nowhere with one house on it with no buying or selling of land in that area for long time simply because the guy owning the house wants to be left alone?
The amount of land is fixed but the value is not. Value after all is subjective.
 
Every economist who knows what he is talking about. But that is a general feature of cost and taxes are a form of cost income tax, or a lvt doesn´t matter. You want to regain this taxes.

It's pointless and not even true. If landlords could raise rent then why wouldn't they do it already?


In theory there is no limit of how high a tax rate can be. But to high taxes can lead to revolutions ;-) At the moment when people losing their homes because they can no longer afford the LVT times are getting interesting.

How would you have a wealth tax over 100%? But yeah otherwise I agree. If you can't afford lvt then you sell the land, if no one will buy it for even £1 then the land value is very low and so tax on it will be very low. If for some reason no one will buy it and yet it still had high tax you just abandon it.


Assess the value could be difficult how are you doing for land in the middle of nowhere with one house on it with no buying or selling of land in that area for long time simply because the guy owning the house wants to be left alone?
The amount of land is fixed but the value is not. Value after all is subjective.

Yeah assessments are hard welcome to the real world. If you make the buying or selling of land an active market disconnected from the property on it then his house will be left alone regardless of the owner.

Of course that raises questions of what being an owner even means

Anyway the government would come to some value based on other similar properties nearby or in similar situations. Make a calculation based on distance from city, etc.
 

kernals12

Banned
One effect I can see from this is the butterflying away of suburban golf courses. They'd be infeasible with taxes.
 

Anderman

Donor
It's pointless and not even true. If landlords could raise rent then why wouldn't they do it already?

They do but there is a limit what tenants can or will pay to lease a real estate. The most expensive ground of a town are covered with commercial real estate not with
apartments (or only with apartements for the super rich).


How would you have a wealth tax over 100%? But yeah otherwise I agree. If you can't afford lvt then you sell the land, if no one will buy it for even £1 then the land value is very low and so tax on it will be very low. If for some reason no one will buy it and yet it still had high tax you just abandon it.

Over 100% of income or the wealth? The absolute sum of the tax could be higher than 100% of the revenue genetated by the object of taxation (in this case the land) or the value of it but then the owner has to pay from other sources of income or wealth. It was more a illustration in what problem you run it you want to have a lvt as the main source of state income as required by the op. And remember the state wants the money not some part of the land.


Yeah assessments are hard welcome to the real world. If you make the buying or selling of land an active market disconnected from the property on it then his house will be left alone regardless of the owner.

Of course that raises questions of what being an owner even means

Anyway the government would come to some value based on other similar properties nearby or in similar situations. Make a calculation based on distance from city, etc.

Agree the government would come up with some sort of rating or evaluation system/rules, 10 year average of land sold in such or such distance for city or last known value etc. The rest is the tax rate. But evaluation of the land will effect things like sprawl because most likely land in city will have a higher value than land outside of them.
 
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