[Retric]

> How is this relevant to land value tax?

It’s an example of distortion.

> Why would earned income taxes not have unpleasant side effects if land value taxes have unpleasant side effects?

Distortion requires some way to optimize for the tax by charging behavior unnaturally. Maximizing income results in the same behavior with and without an income tax. Instead distortion comes modifications like not taxing health insurance and lower rates on long term capital gains etc.

A land value tax incentivizes less efficient allocation of resources on the other hand because land becomes artificially more expensive. For example it heavily disincentivizes farming etc. Obviously you’d end up with same kind of tax breaks but now you’re further distorting the market.

[lotsofpulp]

Land value tax rates can vary within and without metro areas.

It already does, and no one is going to farm a few acres in the middle of a metro or suburb. They will hoard the land and keep it empty or underutilize it with low density housing/business to serve as a piggy bank they can 1031 exchange.

And again, the big distortion is old and wealthy people disproportionately benefiting from an orderly and secure society, while paying the least, while young people who work pay the most. See Additional Medicare Tax for another example.

> Maximizing income results in the same behavior with and without an income tax. Instead distortion comes modifications like not taxing health insurance and lower rates on long term capital gains etc.

I disagree from a society wide perspective, levying a higher tax burden on rent seekers is beneficial. Rent seeking needs to be disincentivized, and using earned income tax to keep rent seeking taxes low (such as land value and estate and cap gains taxes) is overall a negative for the future of society.

[Retric]

> vary within and without metro areas

Even more distortion.

When you look land value tax and start thinking ahh but this impact needs to be mitigated that’s a sign there’s an inherent problem with the approach. There’s an endless list of things people would tweak if it was high enough replace income taxes the flawed system that resulted would still just be less efficient overall.

Just by comparison people don’t single out professions and say lawyers should have higher rates than doctors. You’re not tempted to try and manipulate the economy through central planning as we would be with land value taxes.