Modeling land value taxes

Progressivity, regressivity, and who pays

• One concern: a pure LVT (ignoring improvements) shifts burden from people with large/expensive houses to those with modest houses on similar lots; within a block, the nicest house’s tax falls while the cheapest house’s tax rises.
• Others counter that taxing land alone is more progressive overall: a mansion on a big lot vs many condos on a similar lot currently pays far less per household; under LVT, the land charge is shared across more units, so small-unit owners pay less per unit.
• Critics argue any tax on unrealized value is regressive and hits asset‑rich but income‑poor (retirees, long‑time owners) who can’t easily pay annual bills.
• Supporters reply that high‑value landholders aren’t truly poor; they can sell or borrow against gains, and society must tax something.

Effect on renters and rents

• One side insists any new land tax will be passed through to renters over time, especially where landlords have mortgages or tight margins and moving costs make demand inelastic.
• The opposing view: rents are already “as high as the market allows”; a new LVT doesn’t give tenants more money, so landlords can’t raise rents across the board unless they were previously undercharging.
• More formal arguments:
  • Higher property/land taxes raise required returns, delaying new construction until rents rise enough, which ultimately shifts cost to renters.
  • LVT proponents respond that taxing land only doesn’t penalize building; denser construction spreads a fixed land tax over more units, encouraging supply rather than deterring it.

Land use efficiency vs displacement and “punishment”

• Pro‑LVT commenters stress land is finite, and using a large, valuable lot for a single small house is a luxury that should face higher tax. This should push toward multifamily, townhomes, or apartments.
• Opponents see this as “punishing” people who bought early, planned around current rules, or value space/yards; they worry about forced sales, eviction of long‑time residents, and “soulless” cities as incumbents are priced out.

Politics, transition, and historical experience

• Many think LVT is politically impossible: most voters are owner‑occupiers whose main asset value would be “zeroed out,” and they will resist, especially older cohorts.
• Suggested mitigations: very slow phase‑ins, partial compensation to current owners, pairing LVT with reductions in income or other taxes, or UBI‑style rebates to protect small landholders.
• Historical notes: New Zealand had LVT for ~100 years but abolished it amid unpopularity and limited effectiveness; Britain’s efforts largely failed; Singapore’s 99‑year land leases are cited as a partial analogue.