Editing Land value tax (section)

==Incentives==

=== Speculation ===
{{further|Speculation}}
[[File:Baulücke in Köln-Weidenpesch (9506).jpg|thumb|right|With an LVT, both this abandoned lot and the adjacent buildings would pay the same amount in taxes. This incentivizes the owner to use the land for economic activity or sell it to someone who will.]]
The owner of a vacant lot in a thriving city must still pay a tax and would rationally perceive the property as a financial liability, encouraging them to put the land to use in order to cover the tax. LVT removes financial incentives to hold unused land solely for price appreciation, making more land available for productive uses. Land value tax creates an incentive to convert these sites to more intensive private uses or into public purposes.

=== Incidence ===
The selling price of a good that is fixed in supply, such as land, does not change if it is taxed. By contrast, the price of manufactured goods can rise in response to increased taxes, because the higher cost reduces the number of units that suppliers are willing to sell at the original price. The price increase is how the maker passes along some part of the tax to consumers.<ref name="reforms" /> However, if the revenue from LVT is used to reduce other taxes or to provide valuable public investment, it can cause land prices to rise as a result of higher productivity, by more than the amount that LVT removed.

Land [[tax incidence]] rests completely upon landlords, although business sectors that provide services to landlords are indirectly impacted. In some economies, 80 percent of bank lending finances real estate, with a large portion of that for land.<ref>{{cite web|last1=Hudson|first1=Michael|title=Productivity, The Miracle of Compound Interest and Poverty|date=23 April 2012|url=http://michael-hudson.com/2012/04/productivity-the-miracle-of-compound-interest-and-poverty/|access-date=19 May 2015}}</ref> Reduced demand for land speculation might reduce the amount of circulating bank credit.

While landowners are unlikely to be able to charge higher rents to compensate for LVT, removing other taxes may increase rents, as this may affect the demand for land.<ref>{{cite book |last=Ricardo |first=David |url=https://socialsciences.mcmaster.ca/~econ/ugcm/3ll3/ricardo/prin/index.html |title=On the Principles of Political Economy and Taxation |publisher=John Murray |year=1821 |location=London |archive-url=https://web.archive.org/web/20180810033506/https://socialsciences.mcmaster.ca/~econ/ugcm/3ll3/ricardo/prin/index.html |access-date=15 October 2018|archive-date=10 August 2018 }}</ref><ref>{{cite book | last = Samuelson | first = Paul | title = Economics | publisher = McGraw-Hill | location = New York | year = 1985 | isbn = 978-0070546851 | pages = [https://archive.org/details/economics00paul/page/603 603–605] | url-access = registration | url = https://archive.org/details/economics00paul/page/603 | edition = 12th }}</ref>

=== Land use ===
{{further|land use}}
Assuming constant demand, an increase in constructed space decreases the cost of improvements to land such as houses. Shifting property taxes from improvements to land encourages development. Infill of underutilized urban space is one common practice to reduce [[urban sprawl]].

=== Collection ===
LVT is less vulnerable to [[tax evasion]], since land cannot be concealed or moved overseas and titles are easily identified, as they are [[land registry|registered]] with the public.<ref>{{cite web|last1=Gandhi|first1=Sona|title=Presumptive Direct Taxes |work=worldbank.org |url=http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/EXTPUBLICFINANCE/0,,contentMDK:20233950~menuPK:1747624~pagePK:148956~piPK:216618~theSitePK:1339564,00.html|access-date=24 May 2015}}</ref> Land value assessments are usually considered public information, which is available upon request. Transparency reduces tax evasion.<ref>{{cite journal|last1=Foldvary|first1=Fred|title=The Ultimate Tax Reform: Public Revenue from Land Rent|journal=Civil Society Institute|date=January 2006|url=http://www.foldvary.net/works/policystudy.pdf|access-date=24 May 2015|archive-date=7 February 2014|archive-url=https://web.archive.org/web/20140207152253/http://www.foldvary.net/works/policystudy.pdf|url-status=dead}}</ref>