The major, important difference is that LVT only taxes the site-value of a property, not the value of the buildings etc on it. More or less you'd be charged property taxes as if your lot was a blank empty lot. So for instance if you buy some land and redevelop it into an apartment building or a stadium etc your LVT would hardly change (it might a bit because your building might increase the value of properties nearby, but that's generally a pretty weak effect so it would have a small impact on your taxes). On the other hand, say that over the course of a decade your area gets gentrified, lots of new businesses open up, a new metro line gets put in and the area is booming, while you didn't do anything at all to your property but it's now worth 2-3x as much as you bought it for, well your tax bill will go up a lot (technically speaking, the LVT would go up to such a point that your property should be only worth about as much, accounting for inflation, as it was when you bought the property, since your building isn't worth any more innately).
> it might a bit because your building might increase the value of properties nearby, but that's generally a pretty weak effect so it would have a small impact on your taxes
That sounds like a fantastic way for a developer to force out all of "the poors" around them by developing an area and making the value of their land skyrocket. Since they cant hold it they have to sell which kicks them out of their home for less than what their property would be worth.
Might work fine for NYC where no one actually owns anything. Sounds like a hard deal for a majority of the country where people can conceivably own land.
This already happens in the midwest, where taxes are based on appraised value and someone from New York buying 160 acres of hunting land for some overpriced amount causes the small landholder next door to have to pay triple taxes.
Where I live, NJ, tax amounts aren't calculated that way. They're derived from some complex mens based on local budgets. Since the towns rich people live in have the same budget it has the strange effect of everyone there paying much smaller percentage of property taxes.
The Midwest ones are based on local budgets but then allocated based on assessed values, so when your land jumps because of nearby purchases, you end up paying more related to those who’s property didn’t jump.
This sounds extremely regressive. Basically rich developers will all be getting a huge property tax break by not having to pay taxes on the value of the land/building improvements, while small businesses and homeowners who can not afford to improve their property (or extract profit from it) will not be able to keep up with rising land taxes and be forced to sell. What a stupid idea.
> rich developers will all be getting a huge property tax break
These proposals would generally be revenue-neutral, so the same amount of total tax would be collected, but assessed by parcel (adjusted for demand) rather than by parcel + improvements. An area where there was demand to house lots of people might still have high taxes because the land would be in high-demand because of its potential to host big buildings, whether the buildings were there or not. In other words: they'd have to build the building to afford the tax, because if they put a parking lot on it or whatever, the taxes would swamp any revenue.
As to small businesses/homeowners: ideally in such a scheme, improvements they might want to make would be more affordable than they are under the current system, because they wouldn't owe taxes on the increased value. Ultimately though, you're right: systems like this are meant to address a circumstance where nobody can afford housing because there's way more need than there is supply, by incentivizing increasing the density of housing in such areas, which means some small structures will need to be torn down and replaced with bigger ones, and people unwilling or unable to do that will be incentivized to sell to someone who can. Their well-being gets weighed against the hypothetical well-being of the larger number of people that might otherwise be housed by the larger structures that would replace where they live now.
