| I think Georgism has three main pitfalls: - Under the premise that a land tax should extract all value from the land leaving the improvements to the owner, it would expectedly be very high land tax near urban centers and very low taxes in rural areas. In order to maximize the return on urban plots, the builder is incentivize to build the smallest units possible in the greatest quantity. This is great for young professionals who dig living in studios, but would make family-sized housing of multiple bedrooms extremely expensive. - What do you do for all the people who will see a massive increase in taxes? Force them to sell? I'm pretty sure that's political suicide for any politician. Or do some sort of exemption like Prop 19 al la California? Now we're back at square one. - Who decides what the productive value of the land is? Presumably someone will need to set it, as there is no objective way to determine it (like there is with the value of raw land). Nor would it stay static over time, since improvements around a property, increase the productive value of the land. That's a huge opportunity for politics to come into play to game the valuations, and create special exclusions to buy votes. And if you think about it, we have a quasi-land tax already in place. In CA, the tax rate is static, and most of the value of a house is in the land anyways. So owners (ignoring Prop 19) are paying a property tax based on the value of the land. I do recognize it's the market value of the land, which is different than Georgism which is the productive value of the land. |
And no, Prop 19 is not effectively a land tax, it in fact yields the exact opposite effect which is appreciation in the land does not impact a landowner’s tax bill. Under LVT, fluctuations in land price directly affect the landowner’s tax bill.