Land Value Tax (LVT)

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Definition of 'Land Value Tax (LVT)'

Land value tax (LVT) is a tax on the unimproved value of land. It is a tax on the value of land itself, not on the buildings or other improvements on the land. LVT is sometimes called a "single tax" because it is the only tax that is levied on land.

LVT is a very efficient tax because it does not distort economic activity. Unlike other taxes, such as income tax or sales tax, LVT does not discourage people from working or investing. This is because LVT does not tax the productive activities that people engage in, such as working or building a business. LVT only taxes the value of the land that people own.

LVT is also a very fair tax because it taxes the unearned increment in land value. The unearned increment in land value is the increase in the value of land that is due to factors other than the efforts of the landowner. For example, if the value of land increases because a new road is built nearby, the landowner does not deserve to keep all of the increase in value. The landowner should only be able to keep the increase in value that is due to their own efforts, such as improvements that they have made to the land.

LVT is a very progressive tax because it taxes the wealthy more than the poor. The wealthy own more land than the poor, and therefore they pay more LVT. This is because LVT is a tax on the value of land, and the value of land increases with the size of the landholding.

LVT has a number of other advantages. It is a self-assessed tax, which means that the landowner is responsible for calculating and paying the tax. This reduces the cost of administering the tax. LVT is also a very stable tax, which means that it does not fluctuate with the economy. This makes it a good source of revenue for governments.

Despite its advantages, LVT is not widely used. There are a number of reasons for this. One reason is that LVT is a new tax, and people are often reluctant to adopt new taxes. Another reason is that LVT is a controversial tax, and some people believe that it is unfair.

However, LVT is a very promising tax. It is a very efficient, fair, and progressive tax. It is also a self-assessed tax, which is a very desirable feature. LVT has the potential to be a major source of revenue for governments, and it could help to reduce inequality.

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