[lbarrow]

Yes, that's exactly the idea. In Chicago, where I live, there are surface parking lots in the middle of the downtown surrounded by skyscrapers. In a logical system, the owner of those parking lots would have to pay just as much in land taxes as the skyscraper owners next to them -- and since they couldn't possibly afford to do so, they'd be forced to sell to someone who would develop the land and put it to more productive use. Under the current system, though, the parking lot owner pays peanuts while the skyscraper owner is effectively penalized for putting the land to use.

The gentrification situation is similar: if someone is living in a single-family home in an area that is filling up with apartments, they're using the land much less efficiently than a replacement structure would. As land values slowly increase, the owner would be prompted to eventually sell to someone who would put it to higher value use. You could have some speed bumps in the policy to make sure this doesn't happen too fast, but if you stop it entirely you're just giving up on productive land use.

It's worth noting that property taxes have the same dynamic, since they also incorporate land value in them. The difference though is that _property taxes discourage development_, which contributes to higher rents. Land value taxes do not have this problem; a world where we suddenly swap to LVTs is a world with many more buildings and much lower average rents.

[balderdash]

You realize all those parking lots are owned by big developers who want to develop the land, but are waiting for the right conditions…

[lbarrow]

And right now they can afford to wait forever! But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will.

It's no coincidence that people who support LVTs are typically YIMBYs -- we want to reform urban planning and land use to make it easier to build things.

[eru]

> But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will.

An LVT gives no such incentives. LVT is explicitly agnostic about how the land is being used. You pay the same, no matter how the land is being used. That's why it's economically efficient.

However, a conventional property tax (and also income tax and capital gains tax etc) disincentivise developing. An LVT can help raise enough revenue to be able to lower or eliminate those other taxes, and thus indirectly help remove disincentives to developing.

[lbarrow]

I think you might be missing the context. The scenario we're discussing is a parking lot surrounded by skyscrapers in the middle of a major city. Under a property tax regime, the owner pays little taxes because the structures on the lot are not valuable. Under an LVT, the owner pays the same (high) taxes as the skyscrapers next to it, which would be obvious uneconomical.

So under property taxes, the parking lot owner can afford to wait and have the lot sit empty; under an LVT, they have an incentive to develop.

[eru]

Yes, a property tax system disincentivises developing compared to not having a property tax.

The LVT has no influence on building.

If you draw a two-by-two matrix where the columns are property tax yes/no and the rows are LVT yes/no, you will find that the rows have no influence at all, and it's all about which column you are in.