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Notes -
If the LVT was done honestly, in this scenario you should be paying $0 taxes on the land because its market value is $0. If the land isn't worth $0, a land value tax makes it worth $0 according to the market--nobody would want to buy land that's priced higher than $0, because they have to pay the sale price plus 100% of the value in taxes, which is a net loss.
(And actually, all land would have negative value. The land is valueless because all the value gets taken away in taxes, plus you have transaction costs.)
The usual way the Georgists put it is taxing 100% of the land rent. The market value of the land is indeed zero under this system, but the land rent is not zero.
I have a hard time, even after Googling it, figuring out what land rent could mean here that's not also zero. The land rent is supposed to be the amount of rent the property would generate. Since all the land rent is taxed away, the land owner should be indifferent to how much land rent anyone would actually pay, which would drive the land rent down to zero as well.
This is where 'highest and best' comes in; it's not the land rent actually charged by the landowner, it's the land rent that a user making the 'highest and best' use of the property would pay.
Trying to phrase my objection correctly:
A user making the highest and best use would always pay zero because the amount that this user would pay affects the amount of taxes that the landowner would pay, and the combination of these would lead to the user paying zero, the landowner making zero, and the taxes being zero.
In order for this to work, you need it to be something like "the amount that the user would be willing to pay if there was someone who would care about raising their price that high, even if there's nobody who'd care". That would be consistent, but I can't see how such a thing could possibly be computed.
Forget about the landowner for a moment. Suppose the government has some parcel of land, and wants to get some money for it. So they decide to auction off a lease to it to the highest bidder. The price they can auction that lease for is a good approximation of the land rent for the highest and best use. Now consider that they only auction off short-term leases, so every year (or whatever period) all the land they leased out gets re-auctioned to the highest bidder, with some option to the current leaseholder to match the high bid to extend the lease. Now the government is collecting all the land rent, which has been determined without any annoying zeroes, and someone's making use of the land. There's no "landowner" and no "tax" in this system. But if we call the leaseholder a "landowner" and the rent they are paying the "land value tax", it's the same thing.
That scenario works because the government has found someone willing to pay the amount listed in the lease, so it has a place to get the number from. In the Georgist scheme, the government is going to have to come up with "land rent" values that the owner could have rented the land for even if he isn't actually doing it. There's no lease to pick the number off of.
Figuring out the land value tax without something like that auction would be very difficult, yes.
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Yes. Which is one reason I think it's clearer to model as the putative owner having only a leasehold interest, and the government as the fee simple landowner. The only reason anyone would "own" land is if they want to use it themselves.
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