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Comment by JTbane | Hacker News Reader

Dumb question about land value tax- does it unfairly penalize people who own large tracts of land like farmers and loggers?

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They key is that it is a tax on the value of the land not the size, so large plots of land would face a much smaller tax per acre compared to prime real estate in a city.

It is true that a LVT will have a larger percentage impact on the market value of undeveloped land who bought land for speculation without any investments in making the land more valuable. This will especially affect people who bought up lots of land speculating on the value going up. This includes people who bought up lots of land for farm/lumber/mining, but also people who buy up urban plots and keep them as a flat land parking lot while waiting for the value to go up.

Any change in taxes will have some winners and some losers. For example an increase in traditional property taxes hurts anyone who bought expensive houses. An sales tax/consumption taxes hurts anyone who saved up financial assets. An increase in income taxes hurts people who invested in education to increase their labor value.

The question is which is the least unfair way to tax to meet the needs of society. Most of those other taxes will actively discourage valuable investments that make society as a whole more prosperous. Property taxes discourage building. Wealth taxes discourage saving. Income taxes discourage earning and investment towards future earning. In contrast a tax on land value, doesn't cause there to be any less land. It does discourage speculation in future increases in land value, but that speculation is mostly zero sum (it might make the individual speculator richer, but doesn't increase the wealth of society as a whole).

> They key is that it is a tax on the value of the land not the size

Yes, but you could also say:

"They key is that it is a tax on the relationships between specific landowners and the local representatives and lobby dollars spent"

If the land is only really useful for farming or logging, then no. You'll still get taxed on it, but because the land is relatively low-value it won't be much.

Now, if you're a farmer on the edge of Austin, and the city's growth means your land is getting increasingly valuable due to high housing demand, then your tax will go up, potentially until you're forced to give up farming and sell to developers. That's intentional, it means the land will be used for something more valuable than it's current use.

I think it's worth pointing out that if there's an LVT, whether you own a farm, a parking lot or an empty lot on the edge of Austin, your taxes would go up in any case. There's nothing inherent in an LVT that unfairly penalizes farms.

I'm guessing OP mean it in that a farm needs a lot of land to be viable.

It would "penalize" those people if they owned farmland in areas where there is high demand for housing (and the land itself is valuable). The whole point is to tax all land at the value people would pay just for the land - and as a result would shift activities like farming and logging into less populated areas.

It's a fair concern, but also because property tax already includes some land tax it's not dramatically different. Those activities are already mostly done in areas where land is extremely cheap.

The short answer is no.

The long answer requires a discussion about what you define as "fair" & the exact implementation of the tax governing the land you're talking about. This would be true of any tax though. The answer would still likely be no, though.

Many places have implemented an LVT. I suggest you look into some of them to see how the tax usually plays out in practice. In NSW, Australia, for example, farmland is exempt.

I would guess that the nuance to that question would be the interpretation of "unfairly", no?

If you are sitting on land that is more valuable than the use you put it to, maybe you should have an incentive to put it to more valuable use?

The market calue of the more valuable use is an incentive, whether or not there is additional incentive.

What is a more valuable use than feeding people? Farmers are already incentivized to abuse their land with monocropping and industrialization in order to stay afloat even with the subsidies they already have. A land value tax would make things even worse and would probably result in outsourcing all food production to other countries.

Out in Nebraska, there's very little demand for land for building houses, and the land is not bad for growing corn, soy, wheat and cattle.

Land right next to Lincoln is likely to be valued like other residential and industrial spaces; land out in McPherson County is likely to continue to be valued like other farmland.

If you own a farm in a city or area with high housing demand, yes, I think it would. (edit: and I'm not meaning this to be a sarcastic response -- there are urban farms).

What makes you think this is unfair specifically to an urban farm? What about an LVT treats this urban farm differently from a parking lot or totally undeveloped lot?

Oh my brain edited out the "unfair" part in the original question, I assumed it was just asking about higher value/tax. I think that an urban farm, baring some very extenuating circumstance, is an enormous waste of space. And I'm a part-time (non-urban) farmer.

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