Policy Summary: we should shift a large chunk of the tax base onto land, through an annual tax on the unimproved rental value of land.

Convo With Mark

Values Justification

• Land is a scarce natural resource, so all citizens should share in the value it creates: same reason why we charge royalties on oil extraction.
• Land values are generated by society as a whole, so should be captured by society as a whole: land value is not created by the land owner, but rather by nature (desirable location, amenities), government (guaranteeing property rights, security, infrastructure investment) and society at large (LVs higher in areas that are more productive, have more jobs or social opportunities). So society as a whole should capture land value, not the private land owner.
• Meritocracy: we all benefit if our social systems incentivize productive activity. LVT prevent land owners from profiting through passive ownership of land, which enables a reduction in taxes which punish work and investment.
• Tax what you take, not what you make: LVT taxes you on the value of the land you use (meaning others cannot use it), instead of taxing value that you created with your labor.

Social problems underlying the case for LVT

• Current tax systems massively favor land ownership & speculation: mortgage interest deduction, exemptions from capital gains tax, no tax on imputed income from property (discussion in NZ context)
• Financialisation of the economy: since land is permanent, it's highly attractive as securitisation, driving a huge volume of loans against land (see Ryan-Collins)
• Speculation creates cycles in land values (see Ryan-Collins, Barker review, Mian Sufi)
• High land prices: future rents capitalized into high up-front costs of acquiring property; combined with low user-cost due to expected capital gains; greater lifetime expenditure on mortgage interest to acquire land. (NZ source on rising housing costs)
• **Land is absorbing a rising share of GDP, leaving less for labour income (**see Rognlie and Gutierrez)
• (US-specific) Racial injustice is propagated through land iniquities:
• Generational injustice: older generations have built massive wealth through land, and now extract rent from younger generations who spend more years saving to afford inflated deposits
• Destroying social mobility: renters facing higher house prices get trapped paying rent for longer, reducing their accumulation of savings & slowing their social mobility