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https://www.vox.com/policy-and-politics/22951092/land-tax-housing-crisis This ar

by | Mar 7, 2022 | Accounting

 

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https://www.vox.com/policy-and-politics/22951092/land-tax-housing-crisis
This article is an explanation for why some are advocating for a change in how property taxes are levied. The proposal is for something referred to as a Land Value Tax, or LVT. The need for such a change is argued that there is an incentive to not develop the land into residences that can be used to overcome the current housing scarcity in the United States. It is posited that the rising cost of housing and the widespread inability for younger people to afford their own homes or even their rent is largely attributable to the lack of incentive there is to develop housing on undeveloped land.
Property taxes as they are now taxing the value of structures on land and the land itself as one, this can sometimes disincentive those that own undeveloped land from developing it because it will increase the tax burden. Conversely, taxing only the value of the land itself would allow for development without tax liability consequences, and rental or sale of the newly developed structure would incentivize development, thus reducing scarcity. The opportunity cost to hold undeveloped land would become unreasonably great. The tax burden under the LVT system would then only go up if the value of the land itself goes up. Under the current system, developing something like a large apartment complex would increase property tax burden tremendously, under LVT it would not have the same effect because the value of the land itself would not have an exponential increase and this would make it advantageous to develop land as fully as one can. This kind of tax scheme would greatly improve the level of development in big cities that desperately need it, while also adding benefits to smaller communities.
This article explains all this and gives examples of how it can work and who is and is not in favor of it.

 

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