Land value tax
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Comment by Rick Rybeck on January 16th, 2019 at 12:19 pm
Dear Sir or Madam,
I have read the entry for “Land Value Tax” at http://www.newworldencyclopedia.org/entry/Land_value_tax . The second paragraph is fundamentally wrong because of a few incorrect word choices. The second paragraph now reads as follows:
“Land and natural resources were not created by human effort or ingenuity. Improvements, however, depend upon human labor and capital. Property taxes in their current form, by assessing value on both land and buildings, penalize people who develop their land and maintain improvements by imposing higher tax rates, while at the same time rewarding with lower rates those who let their buildings fall into disrepair or leave their land unused and uncared for. LVT encourages good stewardship of land without distorting market incentives.”
The word “assessing†in incorrect. “Assessing†is merely the function of reporting the value of both land and buildings. Nothing wrong with that. (In fact, we want accurate reporting of these values.) Rather it is the TAXING of improvements that is counterproductive and the TAXING of land value that is typically insufficient.
Also, the word “rates†is incorrect. Typically, under the traditional property tax, the same rates are applied to both land values and building values. Rather, it is the tax PAYMENTS applied to buildings that are higher than they should be. So I’ve corrected the paragraph below:
“Land and natural resources were not created by human effort or ingenuity. Improvements, however, depend upon human labor and capital. Property taxes in their current form, by taxing the value of buildings, penalize people who develop their land and maintain improvements by imposing higher tax payments, while at the same time rewarding with lower tax payments those who let their buildings fall into disrepair or leave their land unused and uncared for. LVT encourages good stewardship of land without distorting market incentives.”
I hope you see how the current word choice is fundamentally misleading. I hope that my suggestion (or some similar re-wording) can be made to correct and clarify this important entry.
Please let me know if you have any questions or concerns. I can be reached at r.rybeck@justeconomicsllc.com or by phone at (202) 439-4176.
Comment by Jennifer Tanabe on January 16th, 2019 at 12:36 pm
Thank you, Rick, for your comment. That paragraph will be corrected as you suggest.
Thank you again for taking the time to help make NWE a valuable information resource.
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