What is a Land Value Tax (LVT)?

How does LVT Work?

A Land Value Tax (LVT) is a method of property taxation that breaks away from the traditional model. Instead of taxing the total value of a property, which includes both the land and any buildings on it, LVT focuses solely on the unimproved value of the land. Imagine a vacant lot next to a bustling commercial area. Under a traditional property tax system, the vacant lot would be taxed less simply because there are no buildings on it. However, with LVT, both the vacant lot and the commercial property would be taxed based on the inherent value of the land they occupy, regardless of the improvements made.

This concept has roots in the 19th century with the work of economist Henry George. He argued that the value of land is largely determined by its location and the benefits provided by the surrounding community, not by the efforts of the individual landowner. LVT aims to capture this economic rent, essentially a premium paid for a desirable location, and use it to fund public services.

Land Value Tax (LVT): Meaning, Work, Benefits & Challenges

Have you ever noticed a vacant lot in a prime location surrounded by developed properties? This scenario raises questions about how we tax land and how it might be influencing development patterns. Enter the Land Value Tax (LVT), a property tax system gaining traction as a potential alternative. Unlike traditional property taxes that consider both the land and the buildings on it, LVT focuses solely on the value of the land itself. Proponents believe this approach could unlock a range of benefits, from encouraging development to creating a fairer tax system. Let’s delve deeper into LVT and explore its potential impact on our communities.

Table of Content