With home prices continuing to skyrocket and new inventory still falling desperately short, there doesn’t seem to be any relief on the horizon for America’s housing supply shortage. While many people would benefit from a long-term solution to this crisis, the last thing most Americans want to hear is about yet ANOTHER proposed tax.
But a new idea is spurring debate in certain circles—using land value taxes to incentivize more building.
A land value tax is a tax only on the land, without considering what is on the land (that is, of course, a separate tax).
The idea is that this tax would prohibit the sometimes excessive profitability that comes with simply owning a piece of land (e.g., a vacant lot where you charge for parking during those busy summer months) and letting it languish without contributing anything to the community. Instead, landowners would, economists say, be inclined to put that land to better use.
A land value tax, depending on how it is implemented, could also push change in the local laws that dictate building and construction constraints.
Vox did a recent article that breaks down this idea in all its pros and cons. Check it out and let us know what you think.