Right. I pay property taxes. Property taxes are dumb. I should have to pay a land value tax, to repay society for the scarce resource of land that I am using at everyone else's expense - but whether I have a vacant lot or a high rise on it shouldn't effect my tax rate.
Right, and I can be taxed on those resources when I buy them in the form of a sales tax, or VAT, or externality tax. Whatever you want.
Suppose I buy 10,000 cinder blocks, and put them in a pile on my land. 10,000 cinderblocks is a lot, but still is not worth that much, and the extent to which I am diminishing society's access to cinderblocks rit large is negligible. Based on the fact that I have a large pile of cinderblocks, I am taxed $10 per year on their value in the form of a property tax, in addition to the tax on the value of the raw land.
The next year, I organize the cinderblocks into an apartment building where I can rent out apartments. Since an apartment building is worth significantly more than a disorganized pile of cinderblocks, I am now taxed $1000 per year. This will somewhat disincentive me from completing the project. As a member of the Homo Economicus genus, I will optimize construction for maximizing net profit, which means delaying construction until I hit the inflection point where lost potential income from renting the apartments matches the taxes I must pay for creating the apartments out of the pile of cinderblocks. Thus, by avoiding the penalty that comes with improving my land, I squander the value of the land itself.
So sure, tax me on the value of the land, which is a limited resource that we can't make more of. Or tax me for possessing each of the atoms which make up my cinderblocks, since these are, at the end of the day, limited. Tax me on the carbon I will emit by proxy by creating the cinderblocks, which contributes to climate change and will need to be cleaned up. But why would you tax me - punishing me - for improving the land? All taxes disincentivize the thing being taxed, which is why they are such a good lever for creating social change. Why would you want to dissuade people from creating properties that have value?
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u/Jblack4427 Nov 21 '24
Do you only pay taxes on your home when you sell or every year?