The LVT is also known as the Site Assessment Tax, an example of an ad valorem tax. Ad Valorem is the Latin expression meaning «by value». Modern examples are most often found in the municipal property assessments that property owners receive each year, in which their land is assessed separately from the various buildings on their property. An owner can make improvements to buildings in the countryside and change the assessed value. But the country itself tends to maintain a more stable value over time. The reverse is also true for a landowner who lets his buildings fall into disrepair. In this case, the total property taxes paid to the community will be lower than before, but the land itself will more or less retain its original value, which will be important if a potential buyer takes into account its tax burden and the real value of what they are buying. Both taxes also have unusual incidence effects (NB – this is still somewhat controversial, see this), the impact may be directed primarily at capital (owner) rather than renters, and due to the positive correlation between homeownership and income, this creates additional natural progressivity in both taxes. The alternative view is that since property taxes are used to pay for local services, they form user fees, without state or federal property taxes, all revenue remains in the community, so it is a uniform tax. Changes in property values are largely determined by market fluctuations and can be extremely volatile. These changes create what economists call a dead weight, which is the measure of loss for society as a whole. These losses have a significant negative impact on the financing of basic services that a wealthy society needs, such as police, fire and emergency services.

Most taxes distort economic decisions. When labour, buildings or machinery and equipment are taxed, people are discouraged from constructive and useful activities, and business and efficiency are penalized because of the tax burden. This does not apply to the LVT, which is payable regardless of whether the land is actually used or not, because the supply of land is inelastic, market ground rents depend on what tenants are willing to pay and not on landlords` costs, so the LVT cannot be passed on to tenants. [9] The Aryan sages of ancient India argued that land should be jointly owned and that uncultivated land should generate the same tax as productive land. «The Earth. is common to all beings who enjoy the fruit of their own labor; It belongs. all equal»; Therefore, «he should leave something for everyone.» Apastamba said: «If someone who owns land does not make an effort and therefore does not carry products, if he is rich, he will be forced to pay for what should have been produced.» [51] The answer is usually «Because of what is nearby.» The value of the land is created collectively, publicly. But private landowners can appropriate this publicly created value, whether they use it productively or not. In other words, they don`t have to contribute to the good party going on around them. Land values can be expressed in two ways. The value of the land is directly related to the value it can offer over a period of time, also known as ground rent.

The capitalization of this basic rent by the land market creates land prices, the other measure of land value. If the basic pension is diverted to the public, for example through the LVT, the price of land will fall and keep everything else constant. Land leases are also changing due to efficiencies arising from the ad valorem aspect of LVT. Most taxes distort economic decisions and stifle beneficial economic activity. [13] The LVT is payable regardless of the quality or poor use of the land. Since the supply of land is essentially fixed, ground rents depend on what tenants are willing to pay, rather than landlords` costs, which prevents landlords from transferring the LVT to tenants. [14] Consider which property classes and/or neighbourhoods pay the most under the status quo. What about owners of above-ground parking lots, vacant lots and barricaded buildings? Are there strategically located parking lots, vacant lots or barricaded buildings that impede economic development? A universal property tax reduction would encourage the development of such properties in prime locations. Everyone knows that the Fathers of the Church unequivocally established the duty of the rich to the poor. As St.

Ambrose said: «You do not give to the poor what is yours, but you give back to him what is yours. You have appropriated things that are for everyone`s common use. The land belongs to everyone, not the rich. [42] Michael Hudson is a proponent of rent-raising, particularly ground rents. Politically, the taxation of economic rents has become the bête noire of neoliberal globalism. This is what landowners and annuitants fear most, because land, mineral resources and natural monopolies far exceed industrial capital. What appears to be a «profit» in the statistics at first glance turns out to be a Ricardian or «economic» rent on closer inspection. The LVT is primarily a desirable base in urban areas where you want to promote density, as the tax is levied on the value of the land, not on developments that people build smaller or higher to minimize their tax burden (for example, someone who wants to build an apartment building would make the units smaller or build more floors).