A land value tax can be progressive
Because land ownership is concentrated among the wealthy, a land value tax falls disproportionately on high-wealth households — making it both efficient and progressive.
The Claim
A land value tax is not regressive. Because the ownership of land and land-heavy housing is heavily concentrated among wealthier households, taxing land value falls disproportionately on the wealthy — so LVT can be progressive while remaining efficient, breaking the usual equity–efficiency trade-off.
The Evidence
- Schwerhoff, Edenhofer & Fleurbaey (2022, IMF) show formally, using optimal-taxation theory with heterogeneous households, that LVT can improve both equity and efficiency.
- The concentration premise is supported by wealth data and by Rognlie (2015) / Bonnet et al. (2021): the wealth gains of recent decades are land gains, accruing to existing property owners.
A Caveat
Progressivity depends on design (exemptions, deferral for the asset-rich/cash-poor, and how revenue is spent — a citizen's dividend makes it sharply progressive).
The Evidence in Detail — a Genuinely Two-Sided Record
This outcome carries its dispute openly. On the challenging side, England & Zhao (2005) found a revenue-neutral shift to a land-favoring two-rate tax in Dover, NH would be regressive among residential owners — and proposed a uniform credit to fix it. Bowman & Bell (2008) replicated the design on Roanoke, VA and found the opposite — progressive by income and poverty rate — establishing that the distributional result is jurisdiction-dependent, driven by where land value sits relative to income. Plummer (2010) adds parcel-level Texas evidence: the shift moves burden off single-family homes and is only slightly progressive within residential property. Common Wealth Canada's modelling (2024) draws the design lesson explicitly: a national LVT alone looks regressive by income decile, and a large flat refundable credit reverses it for most households — the England–Zhao remedy at national scale. The honest summary: LVT's progressivity is real at the top of the wealth distribution (land ownership is concentrated) but design-dependent at the household level.
Strength of Evidence
Strong — follows from the concentration of land ownership plus formal optimal-tax results.
See Also
- Citizen's Dividend · Land Value Tax
- Taxation of Economic Rents (Schwerhoff, Edenhofer & Fleurbaey 2020) — the same authors' survey: a linear land rent tax alone could be regressive on US SCF evidence, but the recycled reform is "very likely to be progressive"
Sources
- Schwerhoff, Edenhofer & Fleurbaey (2022), "Equity and Efficiency Effects of Land Value Taxation," IMF — used for the formal optimal-tax result that an LVT can be progressive given the concentration of land ownership. wiki summary
- Rognlie (2015), "Deciphering the Fall and Rise in the Net Capital Share" — used for the evidence that land wealth (and thus an LVT base) is concentrated at the top. wiki summary