The Time May be Right for Land-Value Taxes

The tax system is based on property values rather than land values, and landlords in cities such as New York City and San Francisco definitely feel the benefit by driving up rent to tenants. Taxes on land have long had a magnetic attraction for liberals and economists, and the time for them may just be blooming.

For economists, they are are enticed by land-value taxes because of their efficiency. The supply of land is finite, and thus taxes on it cannot lower the supply and increase price. As a result, as long as landlords are competing with each other for tenants—whose numbers and willingness-to-pay are unaffected—the tax cannot, in theory, be passed on through higher rents.

Land-value taxes are hard to implement as land is difficult to value. Its price is not recognized directly when property is sold. Some cities in Pennsylvania have tried to levy a form of land-value tax, but the valuations of the land are still controversial.

See The Time May be Right for Land-Value Taxes, The Economist, August 9, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.