The logic for taxing land is that it is fixed in supply. Thus, unlike labor or capital, it will have no excess burden. Taxing income will reduce the incentive to work, save and invest but taxing land won't make any less (or more) of it. This is separate from the structures built on the land or other uses of it such as agriculture. Property taxes on structures do have an excess burden. So the most efficient property tax would only tax the value of the land, not what sits on it. As for the ability to pay those taxes, the state could allow for "reverse mortgages" where the tax liability and interest accrue over time and are collected when the property is sold.

• posted by Mike Bond
• November 19, 2007 @ 9:10 pm
• Permalink

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