> The LVT also has an appealing underlying moral framework: The luck to own a piece of land that happens to appreciate — say, you bought a house in San Francisco before the tech boom — should not come with it the ability to extract rents without providing value.
It seems a bit presumptious to say it is all luck - that somebody couldn't have predicted that the land would appreciate and thus bought early as a strategic move.
There’s a deeper point, which is that land didn’t appreciate because of anything you did. (Unless you developed it, and LVT leaves developed value tax free).
Successful speculation is still luck. The point is that the person who purchased the land may have gained value far in excess of the improvements they made or the capital they provided. Under a LVT the community and government which gave the land value will capture that.
There's a non-zero component of luck, as with any investment. But other classes of investments typically lead to knock-on effects that improve prosperity for others. Its unclear to me how making even an informed bet on a piece of planet Earth and extracting economic value from it for generations is good for anyone but yourself. As such - land should have special treatment from a tax regime if the authority is acting for the well being of all its constituents.
That said, there is a remaining question: should (by which I mean: is it socially desirable) the component of randomness leading to land value appreciation also multiply * the value of improvements?
* I wrote 'multiply' without evidence, largely based on an educated guess. To what degree is this a reasonable claim?
> The LVT also has an appealing underlying moral framework: The luck to own a piece of land that happens to appreciate — say, you bought a house in San Francisco before the tech boom — should not come with it the ability to extract rents without providing value.
It seems a bit presumptious to say it is all luck - that somebody couldn't have predicted that the land would appreciate and thus bought early as a strategic move.