> there is no incentive to speculate and hold productive land out of use hoping its value will go up
It is possible to speculate without holding productive land out of use: You buy it and then rent it out. Which land value tax would presumably have little effect on (except insofar as it increases sprawl and therefore reduces city center land values) because the tax would be passed on to the renter(s).
The reason people buy land in cities and then don't use it for anything is often because they own enough other property in the same city that withdrawing rental units from the market will increase the rents for the other units by enough that the strategy is net profitable. Which seems like it ought to be illegal, but anything nefarious that has the consequence of increasing property values tends to get overlooked "for some reason."
What your link is getting at is if you increase the tax on property/land value, it instantaneously reduces property values to account for the net present value of the future tax payments. So passing it is one-time very bad for current property owners.
Because the housing market is extremely efficient. Rents are essentially property value * current interest rate + taxes + property maintenance costs. But rents are also set from the other side by what renters can afford to pay. So if you increase the tax, the property value goes down to compensate. Anyone who buys the property after the tax is already in place is unaffected.
So there are two ways of looking at it. One is the renter pays the tax (i.e. the formula for rent has "the entire amount of taxes on the property" as a component) and the other is the tax is paid entirely by whoever owned the property when the tax was enacted, via a large reduction in property value. It depends which point in time you're looking at it, the moment when the tax is enacted or rent paid by tenants in the future as a percentage of then-present property values.
But in any case the tax isn't paid by speculators who didn't already own the property in year zero of the tax being enacted.
>It is possible to speculate without holding productive land out of use: You buy it and then rent it out. Which land value tax would presumably have little effect on
If a georgist LVT were assessed accurately, the rental income of unimproved land would equal the tax.
Thus there would be no point in speculation. If the land value went up so would the tax and vice versa.
You almost make a good point, the problem with it is that if land use tax actually only assesses the value of the land, you'll still have speculators speculating on the value of the buildings increasing for the same reason that the land does. Because the value of the building is also dependent on the location.
Which brings up a good question. There are plenty of places where there is a 50-unit ten-story apartment building on a lot of about the same size as the surrounding single family homes, e.g. because the houses have yards and the apartment building fills the entire lot. So what is the assessed value of the "land" supposed to be then? If it's anything the owners of the single family homes could afford then it wouldn't make the slightest dent in the rents collected by the owner of the apartment building.
It's actually a very hard problem. Because in theory any of the home owners could build a large apartment building on their lot and be collecting large rents but if they all did that then rents in that area would crash. But the land is equivalent between the apartment buildings and single family homes, so they "should" all be assessed at the same value.
>you'll still have speculators speculating on the value of the buildings
Congratulations, you just defined "fighting over scraps".
>Which brings up a good question. There are plenty of places where there is a 50-unit ten-story apartment building on a lot of about the same size as the surrounding single family homes, e.g. because the houses have yards and the apartment building fills the entire lot. So what is the assessed value of the "land" supposed to be then?
The assessed value of the land of your next door neighbor will be similar to yours.
If you're asking how it's calculated, check the wikipedia page (the answer is multivariate analysis using property sales).
> Congratulations, you just defined "fighting over scraps".
The difference in rents between a single family house and a multi-story apartment building is "scraps"?
Keep in mind that there is such a thing as market saturation. If there are already as many rental units in an area as their are prospective tenants, the value of land that "could" have an apartment building built on it is not anything like the value of the adjacent land that already has an apartment building on it, because actually building more apartment buildings would oversaturate the market and drive rents into the floor. So nobody will be willing to do that, even if the same person would spend even more money to buy one of the existing apartment buildings which doesn't increase the local supply of rental units.
> If you're asking how it's calculated, check the wikipedia page (the answer is multivariate analysis using property sales).
That's... what? You can't use property sales to calculate a tax which is supposed to devour the rent value of land. The sale price will have the tax built into it. If you have the tax calibrated correctly the sale price of an unimproved lot should be zero dollars and the sale price of a lot with a building should be only the value of the building.
And you couldn't even calculate it using the fact that someone paying money for land indicates that it's under-assessed, because if that was expected to work then no one would ever pay more than $0 as the value of unimproved land even if the current assessment was low, based on the expectation that the assessment will soon become accurate. But if no one is ever paying more than $0 as the value of unimproved land then what are you going to base your estimate on?
>The difference in rents between a single family house and a multi-story apartment building is "scraps"?
No, but if the land is densely populated and high value the potential stream of rental income from building an average house will be lower than the land taxes and you'll lose money building it.
"Scraps" is what speculating over the value of that housing will get you when the only rents to be derived are from the value you create as a property developer.
>And you couldn't even calculate it using the fact that someone paying money for land indicates that it's under-assessed, because if that was expected to work then no one would ever pay more than $0 as the value of unimproved land
Well, that's the point isn't it? If somebody does pay more than $0 for unimproved land (or land with buildings that are worth $0), that's a data point that you can use to adjust your model.
It is possible to speculate without holding productive land out of use: You buy it and then rent it out. Which land value tax would presumably have little effect on (except insofar as it increases sprawl and therefore reduces city center land values) because the tax would be passed on to the renter(s).
The reason people buy land in cities and then don't use it for anything is often because they own enough other property in the same city that withdrawing rental units from the market will increase the rents for the other units by enough that the strategy is net profitable. Which seems like it ought to be illegal, but anything nefarious that has the consequence of increasing property values tends to get overlooked "for some reason."