Under a land value tax system, proponents say property owners would be clamoring to be allowed to develop their land more intensely — leading to more homes being built.
Here’s the theory: Taxing land reduces the profit that comes from just owning a piece of property. Instead, you are incentivized to put that land to work. Let’s take a plot of land near Times Square. That land is so valuable, basically anything you do with it will turn a massive profit so no need to develop it for its most valuable use.
However, if a land tax were to be levied, the owner of that land would need to make sure that the property on that land was actually profitable since the government is taxing away some or all of the land rents that could be charged.
In a 2015 Slate article, Henry Grabar illustrated this point well, pointing to the case of a parking lot charging drivers $40 per day for parking and accruing under $10,000 in property taxes. That parking lot, Grabar writes, sits next to a seven-story building that requires more than a quarter of a million in taxes annually.
This is an interesting idea for trying to help with the current and ongoing housing crisis across America. As a homeowner, I believe the constant push back on building multi tent homes in local areas needs to be stopped. It is far outside the bounds for me to condemn or veto housing options in my neighborhood simply because I don’t like it, or it will “devalue my own property” 🙄, and the most offensive “because we don’t want ‘those’ type of people here”.