Theoretically with an LVT, if the value of the property goes up because you restore and extend it or convert it into a dozen flats the tax stays the same (but still increases if the value increases because youre lucky enough get a good school and a light rail station in the area as the result of others' actions). In practice, it's somewhat difficult to separate the two which is why property taxes are more common (also because the multistorey apartment block built on similarly valued land to the house next door has a lot more people with the ability to pay and the expectation of having local services paid for)

The other difference is that proponents of LVT often argue it should replace other taxes like income tax. But regardless of theoretical efficiency criteria, it's a lot easier to persuade people that a large fixed portion of their earnings are the government's share than give them an enormous bill for the valuable land their house sits on and tell them if they're not earning enough to afford it they can always move (as long as they can find a buyer...). Which is why LVT has been 'inevitable' since before the Industrial Revolution without it being very widely experimented with

Thank you for your response.

I feel like homeowners may become more resistant to city services and improvements in their area if it will impact their bottom line disproportionately. I guess it would come down to the value formulation.

In theory,

Tax should be based on land value, not your improvements. So a really nice house isn't taxed more than a run down house. Fixing up the house, or knocking down a post war box and putting up a nice modern house, should not change your taxes.

Tax needs to vary with the maximum use of the land. A daily farm that is now surrounded by luxury apartments should pay taxes at the same rate per acre as those luxury apartments. This is where people start to flip out and get offended that they might be on the side of things that's disadvantaged by it.

Most property tax systems in the US have features that allow some land to be taxed at much lower rates than other land based just on historical ownership. Most notorious is California's Prop 13. The beneficial incentive system of the LVT is that it encouraging redeveloping now-valuable land. That means grandma can't afford to live there anymore. But, that only happens if grandma owns land that has appreciated, so she's probably okay overall.

I'm not really clear on whether LVT always goes with opposition to zoning or discretionary review, but I have seen some of that as well.

Places with high property taxes disincentivize beautiful building. The nicer you build, the more you pay yearly. LVT does not have this bad incentive problem.

Homeowners whose physical home makes up a lot of the value of their property would probably see a decrease, and those whose home makes up a small amount of the value of their property would probably see an increase. The broad idea is to incentivize actually using land instead of sitting on empty lots waiting to flip them.

So what about specifically a vacant/unoccupied tax as opposed to an LVT? Some places in Canada are doing this to disincentivize ownership of vacant condos/properties.

About the same.

AIUI, they see a few benefits:

- it will ensure someone holding onto empty land for future use will have to pay at the same "rate" as you do. They don't get a discount simply because they choose not to use the land. If you aim to collect the same total amount of revenue, this would lower your tax.

- Use of land would be better optimized if there was no disincentive to build an expensive (eg bigger/denser) building. IMO this is flawed in that local land use rules are the bigger issue compared to tax policy.

Thanks for this response. Disclaimer: I live in a city that is growing constantly and has many growing pains that are being worked through.

To me, it almost sounds like this type of tax puts more power in the hands of big developers, which is a challenge many municipalities deal with right now - striking the right balance with that. If they want to force someone to sell the remaining property in a block they’re trying to develop, wouldn’t they just need to make enough improvements that the city drives that person out with taxes?

I can’t help but think it could incentivize municipal governments seeking revenue to approve big projects without input from people living there, and incentivize people living somewhere to being actively anti-development.

Perversely, if it was based on what the value of the property would be without any building on it, in lots of popular areas it would be more than the cost of the property tax because people will pay a premium for land where they can build what they want if the area is popular.

So I guess it can't be that way, as it would piss a lot of people off.

LVT, in its most pure form, isn’t based on any improvements (or lack thereof) to the land — the tax would be based purely based on the land itself, as if the home were NOT there.

Most likely, it would be heavily based on zoning, neighborhood, and proximity to jobs and transit. Take Los Angeles, for example. I would imagine you could actually see taxes in predominantly SFH enclaves like Calabasas or Malibu 1hr+ from job centers go _down_ while taxes on similar single family homes in West Hollywood or Beverly Hills, being much more incorporated into the urban framework of LA, would go up.

Wealthy people can still have their expansive estates elsewhere, but the incentive is to move them off of land that would have a better use serving more people: just as it doesn’t make too much sense for the Empire State Building to be built in Aspen, CO, it doesn’t make much sense for a single-family, detached vacation home with a white picket fence and yard to be built in the financial district of Manhattan.

So, you're saying it is the way I described but thought must be wrong?

If the value goes up when all else stays the same, it is actually the land value that goes up.

If you completely renovate the house, a property tax would go up but the lvt stays the same.

> If I have a house

After the transition period, far fewer people can afford freestanding single-family buildings.