| The theory of (LVT) land value tax is that it replaces other taxes. LVT has less or no dead weight loss so it's a more efficient tax. > If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even. My claim is that the playing field is not currently even rather it is massively in favor for low-capital, low-labor, and low-regulatory businesses (like car washes) and additionally incentives ostensibly designed to encourage real estate development (1031 like-kind, treatment of real estate as depreciating, etc.) are now primarily used to either speculate on existing real estate or build the minimum to gain ownership/interest in speculation. If you take all the cash you have, you can only buy a finite amount of land. If you build a low-capital but profitable business like a car wash, you are only limited by the leverage limits imposed by lenders. > If desirable high value businesses aren't able to compete with car washes, isn't that the market doing it's thing?
> but what are the 2nd and 3rd order effects of such a change? Tautology yes, as desired no. Technically yes because the market is shifting towards low-capital and low-regulatory businesses because they have a more predictable ROI. The goal isn't to disfavor the more capital & regular intensive businesses just regulate them. i.e the influx of car washes is the undesired 2nd order effect of some other policy e.g. minimum parking for restaurants and apartments (likely no such rule exists for car washes so now you need less land a car wash vs a restaurant). Raising regular property taxes (land+improvements) is just easier solution than waiting for far-reaching tax reform like LVT. IMO it's better to correct the market even if it means raising taxes overall in the short term. |