Comment by AnimalMuppet
6 months ago
I've seen in here a couple people saying that Land Tax is the answer. But...
Let's say I have a building that's sitting vacant. Under the current system, I pay property tax, which is based on the land plus the improvements (the building). So it costs me to hold the building vacant.
If we switch to a land tax, then that would be taxed on the value of the land only (though presumably at a higher rate). But if moving to a land tax is revenue neutral, then the tax on vacant land would be higher than it was before, and the tax on improved land would be lower.
The net effect of a land tax, then, would be to lower the tax on this unoccupied building. How is that supposed to fix the situation?
Your scenario seems to imply that for your empty building (and for every other empty building), there is an identical plot of land that is vacant, that will pay the same land value tax.
Your tax would go up in the following situations. Maybe there is very little, or no vacant land. Maybe every other land plot has a 30-story mixed use office tower/apartment building that is currently paying many multiples of your property tax.
The discussion about land value taxes often involve dense areas where these situations are more likely.