I understand how it creates an incentive to make more efficient use of land. How does it prevent a property owner from passing that LVT onto the tenant renting space on the land (if applicable).
In: Economics
The big advantage is it forces other landholders to make better use of their land (so valuable land that’s vacant or that is very low density pays the same taxes as similarly valuable land that supports many more units).
In other words, a property tax incentivizes people to develop their land less (because they pay taxes on the development), a land value tax doesn’t care whether there’s a very expensive 50 unit structure on the land or it’s vacant, the tax is the same.
Any tax burden will fall on both buyers and sellers, in different amounts based on the elasticity of supply and demand, which basically means which ever side is in a poorer negotiating position is likely to end up paying more of the tax, that doesn’t change whether the tax is on the property, the land, income, alcohol, gasoline, etc.
However, a land value tax is more likely to boost competition in landlords, relative to a property tax, which should put tenants in a better competitive position than a property tax would.
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