[alexitorg]

This makes my head hurt! If the value of an asset is a reflection of it's total future income at net present value, then would 100% tax on the unimproved rent value of land mean unimproved land would be worth $0. The rent on a $0 item would be 0, wouldn't it? Would land become worth the value of the improvements on it? I guess there would be some smaller value obtained for having the right to use the land and the security of ownership, but I can't see how this would be valued. Would there be much difference? Wealthy people would be able to afford the capital to improve and exploit larger amounts of land than poorer people, and so exploit more land? In the situation in say a city, where land is scarce, rent values for properties would greatly exceed the returns expected on the value of the building alone. I would guess the would government calculate the market rent rate for the unimproved land (e.g. rent paid - (interest rate+acceptable profit %) * capital cost of building = unimproved rent)? If not the market value of unimproved land would still be close to zero, so how could you value the rent? Would it just be a tax on excess rental profits for landlords and a tax on owner occupiers? Would you depreciate the cost of the building each year? If a building was depreciated entirely over a 20 year period, would the government extract 100% of rents after that, effectively passing into the government's ownership? It sounds a bit like nationalizing all the land? Does China already do this by giving out 99 year leases? What effect would nationalizing the land have? Nationalizing other asset can lead to adverse effects "reducing competition in the marketplace, which in turn reduces incentives to innovation and maintains high prices. In the short run, nationalization can provide a larger revenue stream for government" - https://en.wikipedia.org/wiki/Nationalization I'm guessing the closest analogy would be with natural resources. Nationalization of oil can end with good results like Norway (responsible management, investment of dividends) or bad results like Venezuela (diversion of resources to political ends, under investment and collapse). Would you see such divergent results with nationalizing land? Would it be in the interest of a government to restrict land usage to increase rents, like how Hong Kong sits on large land reserves and only releases small amounts of land for inflated prices to improve their budget (actually Canberra here in Australia does something similar). Sorry for rambling thoughts...

[doubleunplussed]

The rent isn't based on the sale price of the land, it's based on the value of the land. If land comes with a tax obligation, they're not the same thing anymore.

    sale_price_of_land = underlying_value_of_land - how_much_you_would_pay_as_a_one_off_to_avoid_paying_the_tax_forever

So no, you wouldn't update the tax rate to be a fixed percentage of the new sale price of the land after bringing the tax in. That's not the value of the land, it's just the sale price.

Instead, you would update the tax rate in order to ensure the sale price of unimproved land was zero. If the sale price is zero, that means the tax rate is correctly set so as to cancel out the land value as per the above equation.

It's weird having the value of the land plus tax obligation be exactly zero, which is one of the reasons many Georgists propose merely a 85% tax instead of a 100% one.