Summarizing studies of the impacts of land value tax (LVT) in the economic literature. Where possible, citations contain empirical investigations.
LVT discourages land speculation and lowers vacancy rates
LVT encourages infill and discourages urban sprawl:
LVT increases the rate of housing construction
LVT increases the rate of business formation
LVT can increase investment in the real economy
LVT increases employment
LVT boosts growth
LVT is good for the environment
LVT improves tax compliance and lowers rates of tax foreclosure
LVT is efficient, it does not distort economic decisions or create deadweight loss:
LVT is not passed on into higher rents:
LVT reduces land values, although revenue-neutral LVT shifts raises them
LVT incentivizes optimal municipal governance, makes good public investments self-funding
LVT will reduce inequality, challenge land’s underlying role in inequality
Additional claims
Pollakowski (1982) “examined property transactions in Pittsburgh from 1977 to 1981. They observed that from 1925 to 1978, Pittsburgh‟s land-to-improvement tax ratio was 2:1. In 1979 it was increased to 4:1 and then increased to 5:1 in 1980. Pollakowski’s dependent variable in his study was the probability of a parcel being transacted. He found a positive and discernable effect of the land tax rate. Of the 6812 properties transacted in 1979, Pollakowski estimated that 60 were attributable to the land tax increase. Thus, though the effect of the change in land tax rate was discernible and significant, its overall magnitude was quite minimal.”
Brueckner (1964) thesis, first modern analysis of an LVT shift.
