The Department of Housing and Urban Development said that fair market rents for fiscal year 2024 will rise about 12 % nationwide and that the department has increased funding for housing choice vouchers.
It could reduce land speculation, but as you increase the amount of money someone needs just to own land, then fewer and fewer people will be able to own land. Eventually if you raise prices high enough, only the super-rich could afford it because they’re the only ones who can afford to pay the tax. At that point, you’ve re-implemented feudalism, as powerful landlords extract wealth to pay taxes to the king.
As it stands, you need a ton of money just to own land. Roughly speaking, if you think owning a parcel can provide you $1000 of value per year, you might be willing to spend $10k or $20k or more upfront to own it. And last time I checked, people who can afford that much money upfront are disproportionately rich.
But if it’s taxed at $1000 per year, the net benefits to owning the land evaporate, and you won’t be willing to spend money upfront on it. Nor will others, hence the price of land drops towards zero. Neither you nor rich people want to waste money on something that is just as much an obligation as it is an asset.
And that’s the key idea here: to decouple access to land from economic advantage. This is reverse feudalism. In feudalism, it’s all about concentrating control of land to concentrate the benefits of land ownership. With LVT, it’s about taxing away the benefits of land ownership so it’s no longer this precious commodity that is worth hoarding.
Under a “full” LVT, there would be precisely zero economic benefit nor reason to hoard land. You would effectively just rent land from the government if you believed you had a suitable use for it. And renters are statistically poorer, as paying upfront is a massive barrier to entry. Hence why homeowners are statistically richer, because you need money to pay the upfront cost.
Estonia levies an LVT to fund municipalities. It is a state level tax, but 100% of the revenue funds Local Councils. The rate is set by the Local Council within the limits of 0.1–2.5%. It is one of the most important sources of funding for municipalities.[90] LVT is levied on the value of the land only. Few exemptions are available and even public institutions are subject to it. Church sites are exempt, but other land held by religious institutions is not.[90] The tax has contributed to a high rate (~90%)[90] of owner-occupied residences within Estonia, compared to a rate of 67.4% in the United States.[91]
Reducing the upfront cost of land via land value taxes makes land easier to access for the masses, and it makes the peculiar benefits of land more evenly felt. It’s the opposite of feudalism.
It could reduce land speculation, but as you increase the amount of money someone needs just to own land, then fewer and fewer people will be able to own land. Eventually if you raise prices high enough, only the super-rich could afford it because they’re the only ones who can afford to pay the tax. At that point, you’ve re-implemented feudalism, as powerful landlords extract wealth to pay taxes to the king.
As it stands, you need a ton of money just to own land. Roughly speaking, if you think owning a parcel can provide you $1000 of value per year, you might be willing to spend $10k or $20k or more upfront to own it. And last time I checked, people who can afford that much money upfront are disproportionately rich.
But if it’s taxed at $1000 per year, the net benefits to owning the land evaporate, and you won’t be willing to spend money upfront on it. Nor will others, hence the price of land drops towards zero. Neither you nor rich people want to waste money on something that is just as much an obligation as it is an asset.
And that’s the key idea here: to decouple access to land from economic advantage. This is reverse feudalism. In feudalism, it’s all about concentrating control of land to concentrate the benefits of land ownership. With LVT, it’s about taxing away the benefits of land ownership so it’s no longer this precious commodity that is worth hoarding.
Under a “full” LVT, there would be precisely zero economic benefit nor reason to hoard land. You would effectively just rent land from the government if you believed you had a suitable use for it. And renters are statistically poorer, as paying upfront is a massive barrier to entry. Hence why homeowners are statistically richer, because you need money to pay the upfront cost.
Edit:
I’ll add some empirical results from Estonia:
Reducing the upfront cost of land via land value taxes makes land easier to access for the masses, and it makes the peculiar benefits of land more evenly felt. It’s the opposite of feudalism.