Right. Similar to a property tax, this would discourage land improvements somewhat (though unlike a property tax, it would not discourage non-land improvements like houses).
All land value taxes do something like this. In practice, the effect is small because individual changes to land values are dwarfed by changes caused by external factors like local economic growth.
Many land value taxes are in fact based only on unimproved property value. The main problem is estimating that value, but it’s not really a very difficult problem in practice. The usual solution is to have a valuation office independent from the tax office, and subject to an appeal process where there is evidence that the valuation was incorrect.
It’s not an elegant solution, but it seems much less likely to distort incentives than including power over improvements in the land value.
Right. Similar to a property tax, this would discourage land improvements somewhat (though unlike a property tax, it would not discourage non-land improvements like houses).
All land value taxes do something like this. In practice, the effect is small because individual changes to land values are dwarfed by changes caused by external factors like local economic growth.
Many land value taxes are in fact based only on unimproved property value. The main problem is estimating that value, but it’s not really a very difficult problem in practice. The usual solution is to have a valuation office independent from the tax office, and subject to an appeal process where there is evidence that the valuation was incorrect.
It’s not an elegant solution, but it seems much less likely to distort incentives than including power over improvements in the land value.