The theory of (LVT) land value tax is that it replaces other taxes. LVT has less or no dead weight loss so it's a more efficient tax.
> If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even.
My claim is that the playing field is not currently even rather it is massively in favor for low-capital, low-labor, and low-regulatory businesses (like car washes) and additionally incentives ostensibly designed to encourage real estate development (1031 like-kind, treatment of real estate as depreciating, etc.) are now primarily used to either speculate on existing real estate or build the minimum to gain ownership/interest in speculation. If you take all the cash you have, you can only buy a finite amount of land. If you build a low-capital but profitable business like a car wash, you are only limited by the leverage limits imposed by lenders.
> If desirable high value businesses aren't able to compete with car washes, isn't that the market doing it's thing?
> but what are the 2nd and 3rd order effects of such a change?
Tautology yes, as desired no. Technically yes because the market is shifting towards low-capital and low-regulatory businesses because they have a more predictable ROI. The goal isn't to disfavor the more capital & regular intensive businesses just regulate them. i.e the influx of car washes is the undesired 2nd order effect of some other policy e.g. minimum parking for restaurants and apartments (likely no such rule exists for car washes so now you need less land a car wash vs a restaurant).
Raising regular property taxes (land+improvements) is just easier solution than waiting for far-reaching tax reform like LVT. IMO it's better to correct the market even if it means raising taxes overall in the short term.
I like Georgism but if business taxes were replaced would internet businesses that don’t need a physical location thereby pay much less taxes than those that do have need for physical location? That does sound kinda lopsided, unless we’re also doing a land value tax on prime domain name real estate.
Internet businesses have physical locations somewhere. Even if they are drop shipping than someone else is paying the land value tax for the warehouses they are shipping from. The land use exists somewhere at some level of the value chain and that somewhere would then be taxed.
Not all, for example my SaaS company is fully remote and has no physical location whatsoever. I am cool with paying less taxes and I understand that the purpose of the land value tax is more about utilizing a limited resource effectively and not necessarily about some notion of fairness, but it seems weird that someone like me would not need to buy in besides my own home because of the industry that I’m in.
Then the server farm where your code runs will be taxed. Maybe you run it from your house, in that case then it is part of that.
You are still just moving it around at the end of the day. Presumably as you grow more profitable and wealthy you would relocate to higher value real estate. If not then you are spreading the wealth to lower value areas which is also a good thing. Seems like all good things in the end.
> My claim is that the playing field is not currently even rather it is massively in favor for low-capital, low-labor, and low-regulatory businesses (like car washes)
> If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even.
My claim is that the playing field is not currently even rather it is massively in favor for low-capital, low-labor, and low-regulatory businesses (like car washes) and additionally incentives ostensibly designed to encourage real estate development (1031 like-kind, treatment of real estate as depreciating, etc.) are now primarily used to either speculate on existing real estate or build the minimum to gain ownership/interest in speculation. If you take all the cash you have, you can only buy a finite amount of land. If you build a low-capital but profitable business like a car wash, you are only limited by the leverage limits imposed by lenders.
> If desirable high value businesses aren't able to compete with car washes, isn't that the market doing it's thing? > but what are the 2nd and 3rd order effects of such a change?
Tautology yes, as desired no. Technically yes because the market is shifting towards low-capital and low-regulatory businesses because they have a more predictable ROI. The goal isn't to disfavor the more capital & regular intensive businesses just regulate them. i.e the influx of car washes is the undesired 2nd order effect of some other policy e.g. minimum parking for restaurants and apartments (likely no such rule exists for car washes so now you need less land a car wash vs a restaurant).
Raising regular property taxes (land+improvements) is just easier solution than waiting for far-reaching tax reform like LVT. IMO it's better to correct the market even if it means raising taxes overall in the short term.