You can’t sell the improvements if they’re tied to land that is taxed higher than the improvements bring in (due to mistakes in improvement or changed environment that has increased the land value and the improvements haven’t stayed optimal). The land is taxed at it’s full theoretical value, less than the improvements bring in, and the improvements are literally connected to it.
The value extractable is rent on both the land and the improvement. LVT taxes only the former. E.g. if land can earn $10k/month after an improvement of $1mm, and if interest is 4.5%, and if that improvement is optimal, a 100% LVT is not $10k/mo but $10k/mo minus $1mm*0.045/12=$3,750. So 100% LVT would be merely $6,250.
If your improvement can’t extract $6.3k from the land, preventing you from investing in that improvement is a feature, not a bug.
If your improvement can’t extract $6.3k from the land, preventing you from investing in that improvement is a feature, not a bug.
OK. I hate that feature. Especially since it doesn’t prevent imperfect investments, it only punishes the ones that turn out suboptimal, often many years later.
You can’t sell the improvements if they’re tied to land that is taxed higher than the improvements bring in (due to mistakes in improvement or changed environment that has increased the land value and the improvements haven’t stayed optimal). The land is taxed at it’s full theoretical value, less than the improvements bring in, and the improvements are literally connected to it.
The value extractable is rent on both the land and the improvement. LVT taxes only the former. E.g. if land can earn $10k/month after an improvement of $1mm, and if interest is 4.5%, and if that improvement is optimal, a 100% LVT is not $10k/mo but $10k/mo minus $1mm*0.045/12=$3,750. So 100% LVT would be merely $6,250.
If your improvement can’t extract $6.3k from the land, preventing you from investing in that improvement is a feature, not a bug.
OK. I hate that feature. Especially since it doesn’t prevent imperfect investments, it only punishes the ones that turn out suboptimal, often many years later.