> 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?
Rent is a function of supply and demand, not a landlord's costs, otherwise we would expect changes in e.g. mortgage interest costs to be passed on to, but in practice we don't see this effect. We also don't see landlords who own their properties outright (and thus don't have mortgage interest costs) charging lower rents than landlords in the neighborhood with identical properties who have mortgages. When landlords' costs drop, do they drop the rent in response?
Taxes can be passed on when the tax induces a change in supply. Conventional property taxes are partially passed through because the component of the tax that falls on the building. Tax buildings, get less buildings.
Taxes on land do not affect the supply of the land, this implies they are not passed on and the research literature largely agrees with this.
LVT would push up the supply of rental properties by ensuring that property owners who don't rent out their properties or who don't make efficient use of land lose money.
Thats an incentive to rent out the property or sell up to somebody who will.
It would apply harsh market discipline on landlords - a demographic that has usually been rather coddled.
> LVT would push up the supply of rental properties by ensuring that property owners who don't rent out their properties or who don't make efficient use of land lose money.
That doesn't follow. If LVT reduces the net return on rentals, it will disincentivize construction and maintenance of housing in the first place. If it creates a net negative or zero return on property ownership, it may lead to abandoned/undeveloped property instead of housing development, or more property being used for other purposes than housing.
It's also worth pointing out that the existing ad valorem tax system used for property taxes is functionally equivalent to LVT, and does have these influences on the housing market. LVT proposals are distinguished by their being rooted in (fundamentally flawed) Georgist theory, not by being unique as a form of taxation in practice.
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?
larsiusprime · · focus · HN ↗
Taxes can be passed on when the tax induces a change in supply. Conventional property taxes are partially passed through because the component of the tax that falls on the building. Tax buildings, get less buildings.
Taxes on land do not affect the supply of the land, this implies they are not passed on and the research literature largely agrees with this.
EgregiousCube · · focus · HN ↗
pydry · · focus · HN ↗
Thats an incentive to rent out the property or sell up to somebody who will.
It would apply harsh market discipline on landlords - a demographic that has usually been rather coddled.
Gormo · · focus · HN ↗
That doesn't follow. If LVT reduces the net return on rentals, it will disincentivize construction and maintenance of housing in the first place. If it creates a net negative or zero return on property ownership, it may lead to abandoned/undeveloped property instead of housing development, or more property being used for other purposes than housing.
It's also worth pointing out that the existing ad valorem tax system used for property taxes is functionally equivalent to LVT, and does have these influences on the housing market. LVT proposals are distinguished by their being rooted in (fundamentally flawed) Georgist theory, not by being unique as a form of taxation in practice.