I'm trying to think through the effects of a Georgian tax system, where the levy is based on "the value of the land".  But in my conception, that's either very small, or it actually includes improvement value (and improvements on neighboring land).  The entire value of land is how it's used, I think.

Relatedly, land (and capital generally) is a stock, and taxes are generally a flow.  The proposal seems not to be a one-time tax to just take the land value from current owners and then let future owners enjoy the (unfair) gains, so it's something like "imputed rent" or "this year's expected proceeds from using just the land with no labor or improvements".  I'm unsure how the former isn't including improvements and usage, nor how the latter isn't close to zero.

Are there any examples of how much to tax a few properties in a real (or real-ish) example?  Feel free to specify two small apartment buildings with given (but varying over time) end-user rents, vacancy rates, age of building, etc.   What part of their actual net profit is due to land value?  Likewise for a homeowner with 1/10 acre and an assessed value of $500k (split evenly for tax and insurance purposes between land and house, but actual replacement cost for the house closer to $400k, and Zillow says the value should be closer to $650k).  

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Here's one example: my house! Our purchase price was around $460k. You can estimate the value of unimproved land by subtracting the value the house is insured for from the actual price. It's insured for $360k, so our land value would be estimated at $100k. (I'm sure there are better ways to estimate this-- and I imagine if taxes depended on it, people might try to change their insurance amounts to game the system-- but it works for now.) 

From a quick look at Craigslist, it seems we could rent the place out for maybe $2,500 per month. Multiply that by $100k/$460k and you get that around $540 of the rent is coming from land value, which comes out to a yearly property tax of $6500 or about 6.5% of land value.

Landlords sometimes use a rule of thumb that a property is a good investment if you can charge at least 6% of the purchase price in rent per year. This is pretty similar to the 6.5% I got. In general, it seems that a roughly 5-6.5% tax on the unimproved land value gets you around 100% of the land rents.

($6500 is about 3x our current property taxes, which I think correctly reflects the fact that our house is in a pretty desirable location and the house itself isn't that amazing. Actually, the current Redfin estimate on our house is at $540k, so it would be even higher than that.)

Georgist Tax Clarifications

To clarify, the tax Georgists want (Land Value Tax or LVT) is a tax on the Economic Rent of the land.  While you can find more detailed explanations e.g. here (excellent overview by Lars Doucet, the whole series is recommended), the tax seems to (to my understanding) wind up being around 3-4% of the value of the land per year, after all the math.

As a very basic example, the economic rent of a piece of land (not buildings, just land) from the above:

If a piece of land costs $10,000 to buy, and is leased for $500/year, then an LVT that captures 100% of the land rent is $500/year, which works out to a 5% annual tax of the land value.

While pure Georgism advocates for taxing 100% of that $500/year economic rent, most of the actual proposals top out at 85%, and the more realistic ones are less than that.

Also keep in mind a) that this is tax on the land value, not including the value of the house/apartment building/office/etc. on top of it, and b) this replaces existing property taxes, which already exist everywhere and tax both the land and whatever's on top of it.

 

Stock Versus Flow

My understanding of Georgist policy is that the point is that land shouldn't be a stock at all.  It should not be an appreciating asset that an individual/firm holds.

This is for a number of reasons, including but not limited to:

  • The individual/firm didn't create the land, so why should they exclusively benefit from it?
  • Land held as stock incentivizes land speculation, which increases land prices and has all sorts of negative externalities.
  • Land value generally originates from what the land is near, rather than anything on it; the old real estate adage of location, location, location is literally true.  The individual didn't make the beach or park or subway system the land is near, and yet being near those things is what makes land valuable.

Instead, land should be put to productive use, so the owner can generate sufficient wealth to pay the LVT and have a little extra as a profit.

 

Further Reading

For all your Georgist needs, I recommend the substack Progress and Poverty.

For successful examples of Georgist policy, this article focuses on land policy in Singapore, while this one focuses on Norway.

 

Hope this helps!

I just thought I'd comment that plenty of places do in fact tax land value alone, and not improvements. For example, my region has a state government Land Tax at an average of 1.5% of unimproved land value (with exceptions for especially low land values and owners who live on their property).

There are local council charges ("rates") based on improved value of property, but those are (at least in theory) for services provided by the council. The costs of the services are apportioned by property values and classification and other factors as a proxy for things that are more difficult to measure, and it is not a land tax in anything like the Georgist sense.

There is a list of jurisdictions which implement LVT either via single tax on value, or a split tax where the value of improvements is assessed separately (and charged a lower rate):

https://en.wikipedia.org/wiki/Land_value_tax_in_the_United_States

I think the best candidate for you is probably the Pittsburgh Business District, which seems small and close to your example. Alternatively I suggest Altoona City, which has the most-like-the-Georgians-advocate scheme of high value tax and zero improvement tax.

All of these locations on the list should have public information available on the methods of assessment and actual revenue earned. Whether this can all be had over the internet is another matter, but following those threads should also bring up any studies done using their data.

Sadly, most of the citations on that page (or at least the ones I spot-checked) give 404, and there's no indication of how the land vs improvement/use values are separated.

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Interested in this too. The idea of taxing on the value of the land, not on the improvements seems impractical. Even if we do not consider the buildings/infrastructures on a particular parcel, the land's value is heavily influnced by its location. e.g. its accessibility to nearby services and improvements. So the tax would either still be influenced by improvements or we tax downtown at the same rate as a removed desolate farm. Then the tax rate would be too low. 

This is doable via a number of different methods; see this overview of such methods.

The tax is intended to reflect improvements to nearby land insofar as they make this piece of land more valuable. That is fine, since it doesn't discourage improving this piece of land, and at the same time acts to force those who don't have a good use of the land to sell it.

Are there any examples of how much to tax a few properties in a real (or real-ish) example?

Land values are lower than they would be without income taxes, so attempts to estimate how much can be raised with this methodology will underestimate the real number. Market prices for vacant plots ignore most of the value of land because of privileges and regulations suppressing most of that value. Real estate appraisals ignore even more value because assessors often use as basis income generated by land use without accounting for capital value and because they use historical values that lag behind.

Improvements on nearby land often make this parcel of land more valuable for some purposes and not for others, leading to theoretically split values. If it is taxed at the rate corresponding to the purpose that yields the largest value, then it encourages owners to either use it for the purpose to which it is most suited, or sell it to someone who can. There must be such people, since if nobody was willing to invest any capital required to change the land use then it wouldn't have any value for that purpose at all.

A current owner who does not or cannot use the land for the more valuable purpose will find themselves subject to increasing taxes, which seems somewhat punitive.

Another thing I'm not sure about is land values that derive from very narrow uses. For example, suppose that a telecom wants to build a 6G tower in a particular small area and would derive large value from it. There are three suitable properties, and they are willing to pay $3M for any one of them. The alternative residential use is more like $100k each.

Does that mean that the unimproved land value of all these properties is now $3M, since there is a buyer willing to pay that much and receive enough revenue from its use to make that worthwhile? $1M since that they would definitely not buy more than one property and so it should be split three ways? $100k since they haven't bought anything yet and who knows they might not? Some windfall tax that means the government gets almost all of the $3M purchase price?

I don't know what Georgism says about this sort of situation at all.

or it actually includes improvement value (and improvements on neighboring land)

It typically would include rent/value resulting from improvements on neighboring land, but not on the land parcel in question. This could cause some amount of inefficiencies due to the ability to bundle/unbundle land parcels (so with a Georgist tax landowners are disincentivized to do improvements that would raise the value of nearby land, whereas without a Georgist tax they could buy up nearby land and resell it after the improvement).