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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).
Strength of Evidence
Strong — follows from the concentration of land ownership plus formal optimal-tax results.
See Also
Sources
- Schwerhoff, Edenhofer & Fleurbaey (2022), "Equity and Efficiency Effects of Land Value Taxation," IMF — wiki summary
- Rognlie (2015) — wiki summary