# Land value tax A **land value tax** (LVT) is a recurring tax on the *unimproved* value of land — the site, location, or ground rent — not on buildings, crops, or other improvements. In the three-factor classical schema (land, labor, capital), it is a tax on land only. ^def Also called a site-value tax. It is not the ordinary property tax, which usually taxes land *and* structures at the same rate. ## Why land is treated as special 1. **Inelastic supply.** You cannot make more location. Taxing it does not shrink the quantity the way taxing wages or buildings can. 2. **Community-created value.** Most urban site value is proximity, infrastructure, and agglomeration — not anything the title-holder built. 3. **Visibility.** Land does not move to a tax haven. 4. **Opposite incentive from a building tax.** Taxing structures punishes improvement. Taxing the site punishes holding land idle. [[@TaxLandNotMan]]: “Property tax is 2 taxes… they have opposite effects.” This is why Friedman and Stiglitz are often quoted as calling LVT the “least bad tax,” and why urban economists treat it as a strong *local* instrument even when they reject George’s [[Single tax]]. ^leastbad ## Design choices | Design | What is taxed | Typical claim | |---|---|---| | Conventional property tax | Land + buildings, same rate | Status quo; discourages building | | [[Split-rate property tax]] | Land at a *higher* millage than buildings | Pennsylvania cities; incremental LVT | | Pure LVT | Buildings at zero; land only | Altoona PA for a period; Georgist ideal at local level | | Near-100% LVT / single tax | Attempt to collect most or all ground rent; abolish other taxes | [[Henry George]]; [[@TaxLandNotMan]] | | Increment / betterment levies | *Change* in site value on sale or rezoning | Britain’s [[People's Budget 1909]] increment duty | Two rates that get confused: - **Rate on capital value** (e.g. 1–5% of assessed land price per year). - **Rate on rental value** (a share of annual ground rent). A tax that took 100% of ground rent would drive the *sale price* of land toward zero, because price is the capitalization of expected after-tax rent. That last point is why “100% LVT” and “LVT as one municipal tax among several” are different policies. See critiques under [[Single tax]] and [[People's Budget 1909]]. ^rates ## What it does not automatically do - It does not by itself repeal zoning. If you cannot get a permit, a higher land tax cannot conjure units. - It does not automatically fund a modern welfare state. The [[Henry George Theorem]] says *aggregate land rents equal public-goods spending in a city of optimal size* — a theorem, not a measured budget identity for the United States in 2026. - Assessment is the implementation. Separating land value from building value is the recurring failure mode (Pittsburgh 2001; Britain 1909–1920). ## For and against, in brief **For.** No deadweight loss on a fixed factor; encourages use not speculation; hard to evade; can cut taxes on work and buildings; blighted vacant lots become expensive to sit on. **Against.** Valuation fights; cash-poor, land-rich owners (deferral-until-sale is the usual patch); capitalization is an immediate hit to current owners; search/discovery of new resources can be discouraged if “unimproved value” includes what exploration finds; a high rate without other taxes may not raise enough, or may destroy the market price signal (Rothbard). [[@TaxLandNotMan]] wants the high-rate, all-other-taxes-abolished version so land ceases to be a store of value. Most living LVT advocates want a *partial* shift. --- ## Citations 1. [Land value tax in the United States — Wikipedia](https://en.wikipedia.org/wiki/Land_value_tax_in_the_United_States). Definition; U.S. history; Pennsylvania split-rate table. 2. “The ‘Georgists’ Are Out There, and They Want to Tax Your Land,” [*New York Times*, 12 Nov 2023](https://www.nytimes.com/2023/11/12/business/georgism-land-tax-housing.html). “Perfect tax”; Fairweather on development incentives; Duggan “land should eat.” 3. [The Best Tax You’ve Never Heard Of](https://hatethegame.substack.com/p/the-best-tax-youve-never-heard-of). Friedman / Stiglitz “least bad tax.” 4. [The time may be right for land-value taxes](https://economist.com/briefing/2018/08/09/the-time-may-be-right-for-land-value-taxes), *The Economist*, 2018. Capitalization into prices; cash-poor owners. 5. Samuel Watling, [“The failure of the land value tax”](https://worksinprogress.co/issue/the-failure-of-the-land-value-tax/), *Works in Progress*, 2025. Assessment and British history. 6. Gochenour & Caplan, [“A Search-Theoretic Critique of Georgism”](https://www.econlib.org/wp-json/wp/v2/posts/16049), Econlib, 2012. 7. Account posts: [[TaxLandNotMan-sources]] (land vs improvements; store of value). 8. Related notes: [[Split-rate property tax]], [[Single tax]], [[Henry George Theorem]].