> The land value tax can’t be dodged by leaving nor can it be passed on to renters.
In what sense can't it be passed to renters? Esp if all landlords in the market were faced with a new land tax that they had not previously planned for, why would it not be passed on?
The author probably has a very superficial understanding of economics. It's economics 101, like VAT, the cost will be passed to BOTH the renter and the landlord. The portion of each is dependent on market dynamics and hard to calculate.
>In the instance of perfect elasticity of the demand or perfect inelasticity of the supply, the price will remain the same and the entire tax burden is on producers. An example of perfect inelastic supply curve is unimproved land (the supply of improved land is elastic because more or less could be created by investment in improvements) or crude oil. Thus, the whole tax burden is on landowners and owners of the oil.
if there are apartments on the margin of profitability, the cash outlay of LVT will have impact in either landlords quitting the market or deferring/stopping maintenance and such
abeppu · · focus · HN ↗
In what sense can't it be passed to renters? Esp if all landlords in the market were faced with a new land tax that they had not previously planned for, why would it not be passed on?
csomar · · focus · HN ↗
kjshsh123 · · focus · HN ↗
<a href="https://en.wikipedia.org/wiki/Tax_incidence" rel="nofollow">https://en.wikipedia.org/wiki/Tax_incidence
It's literally econ 101 that says landowners will bear the burden of a land value tax.
Supply of land is perfectly inelastic and land value tax is not a marginal cost of production so does not change MR=MC.
bijowo1676 · · focus · HN ↗
renters rent apartments/houses, and these things are very elastic.
the cost increase is shared between renters/landlords in the ratio of their elasticities. Whoever is more inelastic, will eat the cost.
Inealstic renters will pay up increased rent (like techbros in SF are eating up all rent increases).
Elastic renters will get up and move to Texas, if renter swill hike rent.
Elastic landlords will lever down and decrease number of low margin properties like rent-controlled properties, or unprofitable properties.
Inelastic landlords will eat the taxes and take a hit to profitability.
kjshsh123 · · focus · HN ↗
You can feel free to solve the profit maximization problem of the apartment owner if you want.
<a href="https://en.wikipedia.org/wiki/Profit_maximization" rel="nofollow">https://en.wikipedia.org/wiki/Profit_maximization
bijowo1676 · · focus · HN ↗
kjshsh123 · · focus · HN ↗
A conversation with an LLM where you paste this exchange into the context is likely to clear up the reasons for your misconception.