Hacker News Reader

Comment by toomuchtodo | Hacker News Reader

> land value taxes

What is the value of a land value tax? (ELI5)

In the most basic sense, land value tax would mean that the tax would be the same whether your land was just sitting there empty or you had a hundred-story skyscraper on it.

I don't know what that effects it would have. I assume the first and most direct effect would be budget shortfalls in local governments which would probably try to create more fines[0] and sin taxes (assuming they are still legal).

[0] LA has an almost $200 fine for jaywalking. I'd argue that fines and confiscated money from drugs should never go into general treasury much less directly used to fund the department collecting such fines and confiscations. Our government should run on taxes alone and not on fines and fees. http://www.nytimes.com/2013/12/26/us/in-a-car-culture-clash-...

"I don't know what that effects it would have. I assume the first and most direct effect would be budget shortfalls in local governments which would probably try to create more fines[0] and sin taxes (assuming they are still legal)."

In principle you could have a revenue neutral transition to a land-value tax. In practice, it might very well lead to crazy numbers.

Land which is worth enough to put a hundred story skyscraper on it usually doesn't stay empty for long, especially if the landowner is paying the same tax rates as the owners of the surrounding city centre lots.

There's no a priori reason to assume that land value taxes would either fully replace other tax systems or not be revenue neutral. If collected locally, they might even favour well-managed local governments who should see their investment in better services reflected in higher land prices.

Interestingly, it would be a huge blow to cars in cities, as parking would need to get substantially more expensive.

I cannot ELY5 because I don't find that simple nor obvious and it would also require explaining the distinction of "unimproved" land value, but: "Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground." - Adam Smith

Thank you!

Reply on news.ycombinator.com