What is a land value tax?
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A land value tax (LVT) is a levy on the value of land, excluding the value of buildings or other improvements on it. The idea is to tax just the land itself based on its location and potential uses, thereby encouraging efficient land use. LVT has several proposed benefits:
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Economic Efficiency: It doesn't penalize productive activities or improvements made on the land, unlike property taxes that also tax buildings or personal income taxes that tax earnings 1.
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Revenue Generation: It could potentially fund substantial portions of public services. Estimates suggest that a 100% land value tax could raise trillions of dollars annually in the US, enough to fund significant government programs 2.
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Land Utilization: Since the tax is based on the land's inherent value, it discourages land speculation and holding onto unused or underused land, potentially leading to more productive use of urban spaces 3.
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Transparency and Simplification: A LVT is easier to administer and harder to avoid compared to income or capital taxes. The visibility of land ownership makes it simpler to assess and collect 4 5.
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Fair Distribution: By targeting the unimproved value of land, the wealth generated by the community and government investments (like infrastructure) can be more fairly distributed rather than benefiting only landowners 5.
Additionally, the discussion on LVT includes concerns about its implementation and transition from current tax systems without adding burdens on taxpayers. There are proposals to start it at a local level and potentially use the revenue to offset other taxes or fund universal basic income 6 3.
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