Comment by xnx
1 day ago
Good overview. What's the imperative for a government to incentivize owners to invest in their property? Seems like it's fine if the owner invests in their property or not.
1 day ago
Good overview. What's the imperative for a government to incentivize owners to invest in their property? Seems like it's fine if the owner invests in their property or not.
The imperative for the government is to reduce the deadweight loss of under-improved land. Whether or not the owner chooses to improve should be their choice, but there is an opportunity cost to not improving.
Absent a LVT, that opportunity cost is mostly born by the people who don't own the land, i.e. the coffee shop that _could_ have been there instead of whatever lower value use is there now. With a LVT, that opportunity cost falls more on the person who owns the land, i.e. the owner wants to keep their SFH in the urban neighborhood, but now pays a higher tax which reflects that under-improvement.
It makes GDP go up