[RandomLensman]

If landowners already maximize profit, why would you expect any change if you tax landowners in a way that encourages profit maximization from land? Or do you mean things like more industry and less housing? Smaller, high density and expensive housing instead of larger housing?

[rocqua]

Landowners can now maximize profits by renting it out and speculating on land value increase. They are getting value for free, at the expense of the renters and people who can't find land. They are nothing but a drag on society if they take this approach.

Note that a landlord who builds and maintains a nice house isn't freeloading and not part of the problem.

The problem to solve here is vacant lots, land speculation, and, slumlords. Anyone who makes their money off their land from it just being there, rather than by working on improving or using the land. Put differently, anyone who makes their money purely by virtue of people who have no other way to access land.

[RandomLensman]

Being a slumlord might be higher profit that other things - why encourage it in such situations?

Also, having nothing vacant at any moment in time will be quite constraining overall. Not sure pushing towards that is useful.

[rocqua]

Being a slumlord could be the most profitable in the current world, but stop being profitable when an LVT were in force.

In the current world, slumlords make profit because their costs are negligible, and it's mostly profit. They could build nicer houses, but they don't deem it worth the effort. They make money either way.

Once an LVT is introduced, if they don't invest, they lose money. All of a sudden, investing in the place becomes worth it.

[RandomLensman]

Sorry, but I don't understand how that follows from an LTV. If the payout from being a slumlord is positive, making no investments might lead to higher IRR than investing, for example. Even if investments where the way to go for higher profit, it might not mean that investments go towards nicer houses.

I think the idea that an LTV can so finely steer investment seems unlikely to me (also, would need to take varying interest rates into account). Trying to steer investments by increasing certain costs has in the past led to a lot of unexpected behavior - I'd assume the same would happen here.

[rocqua]

Here's a sketch of the landlord situation with probably wrong numbers. Just to show the mechanics:

Options for landlord:

Slum: investment: 5$ Monthly income 100$

Decent landlord: Investment: 500$ Monthly income: 180$

In a world without LVT the slum option is quite attractive, especially if you don't have much capital, don't want to do effort, or expect to sell soon.

If you introduce an LVT, that might turn out at about 90$. All of a sudden, investment becomes much more profitable.

And it isn't inconceivable the LVT comes out at 105$ . At that point the slumlord is forced ti either improve, or divest.

The issue with LVT here, is that it will wreck the financials of anyone with significant landownership. It will be a massive transfer of wealth and incine. It will be a totally fair transfer of income. No one is working to earn the money LVT taxes. The transfer of wealth is more hairy, people have worked hard to buy their land. It was at worst a slightly immoral decision if they invested most of their wealth in land, but it is harsh to destroy that wealth.

Regardless of fairness tho, it will face a loooooot of opposition from self interested parties, with a lot of power and influence.

[RandomLensman]

The slumlord could just increase rent a bit, for example (where would other options for housing come from for the current renters?).

At a 90, the slumlord option is still much better than the decent option (100% return on investment in the former, less than 20% in the latter). An LVT would just further highly extractive land use - that might not be by existing landowners but not sure why that would matter much.