Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme.
It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation.
An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades.
Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy.
>>An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades.
That's irrelevant, because the ultimate owners of the corporation - the shareholders - will always be in demand of land. Real estate explains most of the growth in wealth inequality in the US over the last 60 years:
yes but the majority of wealthy people would be satisfied with few million of real estate for personal use. RE investing would drastically change if incentives change
Fair point. I'd be satisfied nonetheless, because the land-ownership component of real estate investment is rent-seeking, that gains the holder value without generating value for society at large. If investment was redirected from land buying to purchasing other types of assets, it would lead to the production of more value in the economy, as unlike land, most asset classes involve man-made resources in which rising demand leads to rising production.
For example, if fewer wealthy individuals bought sprawling estates, and more bought high-rise apartments, we'd see more production of the latter, which would increase housing concentrations in high-productivity urban areas, and in doing so, apply downward pressure on rental rates in areas which offer the most economic opportunities.
The presence of skyscrapers indicates a strong economic region, which makes the value of the underlying land orders of magnitude more valuable - the taxes would increase under LVT. Not sure if enough to account for the discrepancy in productivity, however.
> Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy.
This is basically saying real estate isn't relevant to a modern economy for tax policy. Broadly true in 19th century United Kingdom in the midst of the Industrial Revolution [1]. Disputed by many millionaires today in the US [2]. Another way to track the relative weighting of land in wealthy portfolios is by aggregate measures.
The wealth of the US 1% grew 2.22X from 2005-2020 [3]. During the same period, the value of land held by the US 1% grew from $3,176,274 million to $4,607,729 million, 1.45X [4]. Not a proportional tracking of wealth increase, but I wouldn't call it "not relevant"; this is hardly rounding error territory where I would dismiss it for tax policy purposes. The sample period is also during an ahistorical secular trend when held across decades when securities were and are quite strong compared to real estate assets, so I don't know what a broader and more granular analysis would reveal, but my cursory glance across a one-generation span would make me hesitate to strongly take the "aren't relevant to a modern economy" position with our current set of policies.
The global urban real estate market so severely punishing younger generations for so long with such high prices relative to income and income precarity indicates some severe secular rent-seeking / gatekeeping taking place at an ahistorically wide scale, scope and duration. I have no dog in that hunt; I was purely lucky by timing to not live in that cohort, but I share their hostility to the status quo. If you favor the "modern economy making real estate not relevant" position, then tax, monetary, finance, social and industrial policies like LVT (though LVT is not without its challenges [5] [6]) that disincentivize such rent-seeking and favor a more efficient allocation of limited capital away from real estate towards such modern industries would be welcome, to the point that aggregate measures show little to no correlation between wealth concentration and real estate instead of our current situation.
I'm personally in favor of more metropolitan transit authorities consciously and deliberately using public transportation corridors as part and parcel of an explicit industrial policy that drives down residential costs over time. Residential development is planned more along Singaporean public housing lines with a goal of ever-decreasing DTI ratios (possible with more modern construction techniques like Lstiburek'ean Perfect Walls and Passive Net Zero in structures that last centuries, and co-operative financial organizational structures), than open market operations in the US. This doesn't have to come at the expense of open market operations; they're free to syndicate their own transit networks and monetize those networks. I'm advocating the free market advocates in US real estate becoming even stronger in the global market by practicing true free markets instead of relying upon the crutches of publicly-funded infrastructure to break the capital ground in front of them.
Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme.
It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation.
An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades.
Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy.