The aim is to collect 100% of lands rental value, which drops its selling price to zero. So people would assess the value of land as zero if they had to pay a full LVT.
So if taxes were 101% of the rental value, the price of the land (+ tax liability) would be negative, and all land would default to the government. This would be BAD. If taxes were 99% of the rental value, then I don’t think this same problem happens. (Under a normal land tax, that would reduce the incentive to improve the land, but that’s what all the machinery in this proposal is to avoid). And of 99% is cutting it too close, because predicted land value will only be a noisy estimate of the true value. So I disagree with the aim being to collect 100% of the land’s rental value. I’d say the aim is to collect as much of the land’s rental value as possible, while keeping a sufficiently small fraction of land from having negative value (once the tax liability is included). I wouldn’t be surprised if this ends up meaning that the government could only collect ~2/3 of the land’s rental value.
As I said, 100% is the aim, if not a practical possibility. The effect on the amount people are prepared to pay to buy a piece of land is the same. Zero, or close to it.
Vacancies act to regulate the market. This being one instrument to set rents, thus maximise the income from land. So at any one time there will be a range of rental values collected (whether by private landowners or the state) from 90% to over 100%.
As it happens, with the current plethora of data we have now on rents, selling prices and vacancies its very easy to tax 90-95% of land rents. With dedicated computer modelling easy to get better than this should we wish. Not a problem either way.
As for valuations, housing (which is by far the biggest part of agg land values) is the most straightforward, simply due to the fact homes can be put into classifications and compared like for like between locations.
Without any fancy computer modelling, this would capture > 90% of housing land rents. Of course, if the aim was to collect as much land rent as possible for tax revenue, it would be worth investing in computer modelling which would get very close to 99%.
Commercial property is a little more difficult, but the same principles apply.
As a thought experiment. Imagine you owned all the land in which ever country you lived in and wanted to maximise your income from it. I think you could do better than 2/3rds given the amounts at stake.
I totally missed where that was given as a goal. It is a … confused goal. There is SOME threshold where (as king), you eliminate the idea of private ownership, and simply act as owner directly, making whatever decisions you think maximize your value. This threshold is likely well under 30%, though it may be graduated such that it’s 80%+ of a few exceptionally-valuable places.
To see this, explore what’s different between an owner, and an appointed manager who’s paid a commission.
As the tax authority, you need to AT LEAST make life pleasant enough for your victims/slaves/tax-base that they don’t go to the effort of leaving your jurisdiction or revolting against you.
The aim is to collect 100% of lands rental value, which drops its selling price to zero. So people would assess the value of land as zero if they had to pay a full LVT.
So if taxes were 101% of the rental value, the price of the land (+ tax liability) would be negative, and all land would default to the government. This would be BAD. If taxes were 99% of the rental value, then I don’t think this same problem happens. (Under a normal land tax, that would reduce the incentive to improve the land, but that’s what all the machinery in this proposal is to avoid). And of 99% is cutting it too close, because predicted land value will only be a noisy estimate of the true value. So I disagree with the aim being to collect 100% of the land’s rental value. I’d say the aim is to collect as much of the land’s rental value as possible, while keeping a sufficiently small fraction of land from having negative value (once the tax liability is included). I wouldn’t be surprised if this ends up meaning that the government could only collect ~2/3 of the land’s rental value.
As I said, 100% is the aim, if not a practical possibility. The effect on the amount people are prepared to pay to buy a piece of land is the same. Zero, or close to it.
Vacancies act to regulate the market. This being one instrument to set rents, thus maximise the income from land. So at any one time there will be a range of rental values collected (whether by private landowners or the state) from 90% to over 100%.
As it happens, with the current plethora of data we have now on rents, selling prices and vacancies its very easy to tax 90-95% of land rents. With dedicated computer modelling easy to get better than this should we wish. Not a problem either way.
As for valuations, housing (which is by far the biggest part of agg land values) is the most straightforward, simply due to the fact homes can be put into classifications and compared like for like between locations.
Without any fancy computer modelling, this would capture > 90% of housing land rents. Of course, if the aim was to collect as much land rent as possible for tax revenue, it would be worth investing in computer modelling which would get very close to 99%.
Commercial property is a little more difficult, but the same principles apply.
As a thought experiment. Imagine you owned all the land in which ever country you lived in and wanted to maximise your income from it. I think you could do better than 2/3rds given the amounts at stake.
I totally missed where that was given as a goal. It is a … confused goal. There is SOME threshold where (as king), you eliminate the idea of private ownership, and simply act as owner directly, making whatever decisions you think maximize your value. This threshold is likely well under 30%, though it may be graduated such that it’s 80%+ of a few exceptionally-valuable places.
To see this, explore what’s different between an owner, and an appointed manager who’s paid a commission.
As the tax authority, you need to AT LEAST make life pleasant enough for your victims/slaves/tax-base that they don’t go to the effort of leaving your jurisdiction or revolting against you.