AN OUTSIDE VIEW

There has been a email discussion on this for the past couple of weeks. A lot of US supporters of land value taxation advocate Capital Value (CV) lists as the basis of assessment. The argument against is that the tax erodes its own base and is arithmetical nonsense once the rates get high. I quoted a figure of 5% as the most that could be raised without knocking CVs down to the point they would be meaningless as a revenue base. And a response came back like this... New Hampshire has ad valorem rates of 4%, and no problems. Kiaochow, which probably recovered the highest fraction of land rent in history, used an ad valorem rate of 6%. You appear not to understand the effect of an increase in the ad valorem rate on capital value. Yes. It knocks it down. Unless other taxes have come off at the same time or there are other factors pushing up the price. If you are taxing 6% of assessed capital value, then the capital values must be around 45% of what they would be in the absence of the tax. ...