Without getting into a flame war it is worth considering what the role of a tax really is. The question is whether the LVT is the more appropriate method for accomplishing the purpose of the tax. The present political argument is that there is a "system" that people are benefiting from but not paying for. We don't need to argue the merits of that suggestion, but rather we must consider whether a specific tax ensures that people are paying in proportion to the benefit from the system.
Come on guys... I realize that there are certain desirable aspect of the "fairtax", but if you are going to claim it is better than LVT, you must present an argument as to how it more appropriately accomplishes the purpose of its existence.
Getting back to the idea of the modern era ushering in the existence of "virtual land" that Smith, Ricardo, George, etc. never envisioned... It might be argued that the purpose of a tax is to ensure that those benefiting from the system are paying for the system. Companies who rely on virtual real estate are thus able to bypass the cost of system that they benefit from. Assuming that taxing labor and income does in fact result in increased dead weight loss, it would therefore be a less efficient tax system. So taxing them on income provides exactly the wrong incentives. We want them to expand and hire more people, but also pay for the system in proportion to their use. If they are in fact benefiting from use of virtual real estate, and virtual real estate is essential comprised of "informational wave" real estate. Might they be charged in proportion to their bandwidth or radio wave usage? IOW, are air waves similar to physical property. We are already finding out that you can really only cram a certain amount of information into the radio wave spectrum.
What is the estimated land tax percentage rate to be charged in order to remain revenue neutral to our existing tax system?
and how do you calculate the tax differential between productive and non productive land? by the income it produces? oops, we are back to a income tax
To provide a bit more background on the reason why so many of the biggest names in economics support the LVT above all other forms of taxation is as follows. The idea is that the land in America belongs inherently to nation. No person created the land, and any increase in the value of that land is resulting from the value of the system around it. The "owner" of that land is thus benefiting from the effort of others. Can a person truly "own" something that belongs to the nation, or is that person actually renting the land from the community? So the argument of George, Smith, et al. is that the improvements on the land are the direct results of the labors, intelligence, etc. of the owner. The land itself only increases in value if the system around it is developed. Consider the idea of a very intelligent businessman building a company in the middle of open fields because he was able to purchase the land at a small price. He subsequently builds a very profitable company. Does the fact that the company is profitable increase the value of the land it sits on. The answer is a resounding "NO". The land around him still sells for a very small price and anyone wishing to buy his company is only going to pay that value for the land. They will pay a premium for his business that directly resulted from his efforts, but not for the land. Once the area around him fills up with other successful businesses, the land increases in price, but it was not resulting from the efforts of that businessman, but rather the community around him. Therefore it is not unreasonable to argue that the value of that land belongs to the community that created it [the value]. The business owner is simply "renting" the privilege of using the community land in an effort to make money for himself. In the end, he is rightfully entitled to value increase directly resulting from his genius and effort, but not the effort of the community. Thus, the building value is his and should not be taxed, but the land value is the community's and should be taxed.
No we aren't. You need to think a bit more deeply about it. The LVT is based on a % of the land's value. Two lots of equal size but differing values carry a different tax burden. So what determines the value of a property? It is in your question. The value is derived from its potential most productive use. That is also the current reality of the real estate market. Thus, nobody has to directly determine whether a plot should be taxed more or less. The market has already valued the land based on its most productive use. Remember we are talking about unimproved land value only, regardless of what sits on it.