[carradjm]

https://en.wikipedia.org/wiki/Georgism

That quote is the exact reason that land needs to be taxed at a much higher rate than it's currently taxed. Notice I say "land", so that doesn't include anything built on that land.

The value of land is directly tied to the desirability of the land around it. Land in Manhattan is more valuable than land in the middle of South Dakota because of all the network effects of other people (and the government) building things in Manhattan.

[chimeracoder]

> That quote is the exact reason that land needs to be taxed at a much higher rate than it's currently taxed. Notice I say "land", so that doesn't include anything built on that land. > > The value of land is directly tied to the desirability of the land around it. Land in Manhattan is more valuable than land in the middle of South Dakota because of all the network effects of other people (and the government) building things in Manhattan.

I'm glad you mentioned Manhattan.

Land-value taxes encourage property owners (or aspiring property owners) to take actions to decrease the value of land, in order to make it cheaper to acquire and maintain (read: pay taxes on) that land. Those actions have significant network effects, much more so than actions that increase (or decrease) property values, by definition: the value of land is more strongly correlated with the value of neighboring land than the values of properties are.

Taken to the extreme, this will cause massively capitalized institutions to blight land - and, in some cases, even buy up land for the specific purpose of blighting it and reducing its value (thereby reducing the value of neighboring land). That results in a massive wealth transfer from the poor and middle class to wealthy institutions - namely banks and universities with large endowments, though sometimes wealthy individuals too.

I'm glad you mentioned Manhattan, because it's one place where this exact practice already happens in a very public and visible way. It happens in Manhattan even without the existence of specific tax incentives to encourage this behavior because the economics of real estate in the area (along with other aspects of real estate acquisition in NYC) make it profitable for institutions like NYU and Columbia to do this[0]. If you started taxing land at a higher value than the property that sits on the land, it would make it lucrative for "smaller" institutions (ie, other well-capitalized institutions) to start doing it as well.

[0] NYU and Columbia are two of the top three holders of real-estate in the city, by value. They have both engaged in this practice in very visible and documented ways.

[dmwallin]

Part of your premise here seems logically incorrect. If land-value taxes is more heavily affected by neighboring properties then they should actually be harder, not easier, to manipulate since this is a two way asymmetrical situation. For any given amount of blight property values should lower by a larger percent than land values

[carradjm]

Do you have proof of this? What are these visible and documented ways?

I'm not certain I completely understand your argument. Basically every explanation of LVT that I've come across says that it will decrease the amount of blighted land, as a land-value tax increases the incentive for landowners to improve their land.