Land Value Taxation

Learn more about land value taxation and explore the principles, research, and real-world examples behind it, and why we support bringing it to our communities.

The problem….. our current tax system falls short

While most of us would like to see more jobs, businesses, services, and families in our communities, governments usually get their revenue from taxes that drive prosperity away.

Governments usually get their revenue from taxes that drive prosperity away. Sales taxes, income taxes, wage taxes, and taxes on buildings discourage productive people, businesses, and investment.

Every sales tax, income tax, wage tax, or tax on buildings is a notice to productive people to “stay away.” We can fiddle with the details, providing exemptions and incentives for particular groups, but our backwards tax system is a big reason why unemployment, poverty, and loss of tax base are major problems in so many American communities.

But we do need revenue to provide services. How else could we get it?

The Remedy …. land value taxation

Land Value Taxation provides needed public revenue without discouraging productive work. Instead of taxing sales, jobs, earnings, or buildings, LVT captures value created by the community. This allows governments to fund services while supporting economic activity.

Site Value… What it means and how to use it

Every piece of land, every site, has value largely because of the community around it. This is partly due to services provided by the community, houses usually cost more in a good school district than in a mediocre one, and partly because a large community provides opportunities unavailable at isolated locations. All we need to do is to measure this value, and gather some of it in order to pay the costs of government services.

Measuring the value is actually fairly straightforward, because the value of the location is the value of the site, and, in most of America, assessors already estimate this value in the course of their regular work. To the extent that assessed value represents site value, then, revenue already comes from this source.

Some ways to take advantage of Site Value

Local and state policy makes can use sound economic principles to generate revenue while facilitating prosperity by

Making sure that vacant land is assessed and taxed no less than what existing law provides.
Revising real estate assessments or tax rates so that a greater proportion of the tax burden falls on underused parcels, less on parcels that are fully developed in accordance with existing plans and policies.
Avoiding tax increases on sales or income by instead raising the effective tax rate on site value.

Effects of Land Value Taxation on our Communities…

On Local Government

While most taxes drive away economic activity, sites cannot be moved away.
The tax is also relatively easy to administer, since appraisers have well-developed methods for estimating site value, and this work is most efficiently done on an areawide basis.
To the extent that taxes can be shifted from improvements, or economic activity such as sales or income, to site value, the total cost of tax administration is likely to decrease.

On Tax Payers

Most homeowners and active businesses see some decrease in taxes.
Owners of rural land and farms may see a small increase in taxes, or a decrease if development pressure focuses on infill instead of the urban fringe.
Owners of buildable vacant or underused land pay substantially higher taxes.
Renters benefit because they may become able to purchase, and eliminating taxes on buildings encourages more construction, including apartments.

On Economic Growth

Because new construction is subject to lower taxes, more construction is likely to occur.
Because existing improvements are subject to lower taxes, buildings are more likely to be maintained rather than abandoned or demolished.
For both of these reasons, the amount of vacant land within developed neighborhoods will likely decrease.