Georgism contends that an LVT only taxes the unimproved value of land (its location and public benefits), not the value added by private investments. The agglomeration effect induced by private investment is untaxed while the agglomeration effect induced by public investment is taxed.
How is the agglomeration effect induced by private investment untaxed? Wouldn't that show up in land value rather than improvements and thereby be taxable?
A common misconception is that LVT taxes the raw value of the land. LVT taxes the unimproved value of the land without any investment put into that direct parcel of land.
If you make an investment into your piece of land, LVT taxes your land as if you didn't make that investment. It does consider if your neighbor had invested into their land.
Yes, my point is that for large landowners and developers, you are effectively your own neighbor and capture your "neighbor's" (ie. your own) spillovers.
If you're a large landowner and you invest a lot of money into your own land more power to you. Society thanks you for making something valuable out of nothing. You get to reap the reward. The entire point of developing land under Georgism is to capture the value from your investment into your land. Georgism says that your neighbor does not get to capture the value from being next you - society does.
If you make a subdivision and put in all of the houses, sewer, water, electricity, road maintenance, etc and hold onto that land forever, great! If people build more subdivisions around your subdivision, STOP! Do not pass Go. You do not get to benefit from that. Note that this means your land value tax will go up if your neighbors develop their land.
You will always have neighbors unless you live on an island.
Yes, but it's unclear to me that a land-value tax can effectively differentiate between those two sources of value-creation (am I wrong to think that higher land value on one part of your land resulting from improvements another part of your land would still be counted as taxable land value? And if not, how would they be administratively differentiated?).
The LVT theoretically targets the value of the land as if it were entirely unimproved, but with its current access to public services and the benefits of surrounding development, both public and private.
You're overthinking this. If you invest in your land and the rest of your same land parcel goes up in value it is not taxed additionally.
Valuation techniques vary from looking at transaction prices to AI. There are a lot smarter people than me doing this: ValueBase is a startup that is solving this problem (https://www.valuebase.co/)
Georgism contends that an LVT only taxes the unimproved value of land (its location and public benefits), not the value added by private investments. The agglomeration effect induced by private investment is untaxed while the agglomeration effect induced by public investment is taxed.
How is the agglomeration effect induced by private investment untaxed? Wouldn't that show up in land value rather than improvements and thereby be taxable?
A common misconception is that LVT taxes the raw value of the land. LVT taxes the unimproved value of the land without any investment put into that direct parcel of land.
If you make an investment into your piece of land, LVT taxes your land as if you didn't make that investment. It does consider if your neighbor had invested into their land.
Yes, my point is that for large landowners and developers, you are effectively your own neighbor and capture your "neighbor's" (ie. your own) spillovers.
If you're a large landowner and you invest a lot of money into your own land more power to you. Society thanks you for making something valuable out of nothing. You get to reap the reward. The entire point of developing land under Georgism is to capture the value from your investment into your land. Georgism says that your neighbor does not get to capture the value from being next you - society does.
If you make a subdivision and put in all of the houses, sewer, water, electricity, road maintenance, etc and hold onto that land forever, great! If people build more subdivisions around your subdivision, STOP! Do not pass Go. You do not get to benefit from that. Note that this means your land value tax will go up if your neighbors develop their land.
You will always have neighbors unless you live on an island.
Yes, but it's unclear to me that a land-value tax can effectively differentiate between those two sources of value-creation (am I wrong to think that higher land value on one part of your land resulting from improvements another part of your land would still be counted as taxable land value? And if not, how would they be administratively differentiated?).
The LVT theoretically targets the value of the land as if it were entirely unimproved, but with its current access to public services and the benefits of surrounding development, both public and private.
You're overthinking this. If you invest in your land and the rest of your same land parcel goes up in value it is not taxed additionally.
Valuation techniques vary from looking at transaction prices to AI. There are a lot smarter people than me doing this: ValueBase is a startup that is solving this problem (https://www.valuebase.co/)