You’ve probably driven past that empty lot in your neighborhood—the one with the weeds, the broken fence, the ‘For Sale’ sign that’s been there for years. And you’ve probably wondered: why is that land sitting there, doing nothing, while my rent keeps going up?
Here’s the answer nobody tells you: the tax system is rigged to reward that empty lot. The current property tax doesn’t just fail to discourage land speculation—it actively encourages it. Every time you add a deck, renovate a kitchen, or build a new apartment, your property tax goes up. But the speculator who sits on a vacant lot? Their tax barely changes. That’s not a bug. That’s a feature of a system designed to reward hoarding, not building.
This is the heart of the land value tax (LVT) argument. Instead of taxing the total value of a property—building plus land—LVT taxes only the land itself, at a higher rate. The building? Tax-free. The result: suddenly, holding onto empty land becomes expensive. Building housing becomes cheap. The financial incentive flips from ‘sit and wait’ to ‘build or sell.’
Think about what that would do to your city. That vacant lot downtown? The owner finally has a reason to develop it. The parking lot that’s been there for decades? It becomes a prime candidate for a mid-rise apartment complex. Urban sprawl slows down because the core becomes more valuable to build on. Land value tax is the closest thing to a free lunch in economics: it taxes the unearned windfall of location while encouraging every productive use of land.
Now, you might be thinking: ‘That sounds great, but why isn’t it everywhere?’ Because the people who benefit from the current system—the ones holding millions in undeveloped land—have a lot of money and a lot of political influence. They’ve convinced politicians that taxing land is ‘un-American’ or ‘complicated.’ It’s neither. It’s simpler than the current mess. Look at Pennsylvania: some cities have a split-rate tax that’s a step in the right direction. Look at Spokane, Washington—a recent proposal to shift toward LVT sparked a firestorm of opposition from the very speculators it would hit.
We’ve been told that property taxes are the price of local services. And they are. But the way we calculate them is a disaster. You’d think taxing property based on its total value makes sense. It doesn’t. It taxes the one thing we want more of—housing—and ignores the thing we want less of—land speculation.
The next time you see a vacant lot in your city, ask yourself: who is the tax system really working for? Because it’s not working for you. It’s not working for renters. It’s working for the people who have the power to sit on land and do nothing. Land value tax flips that script. It’s time to stop taxing houses and start taxing land.
FAQ
Q: Isn't a land value tax just a new tax on homeowners?
A: No. LVT is not a new tax; it's a shift in how we tax property. Homeowners who build or improve their homes would see their tax burden decrease because the building value is no longer taxed. The tax increase falls on land speculators holding vacant or underused lots. Most homeowners would actually pay less, especially if they live in dense urban areas where land values are high but building values are moderate.
Q: How would LVT actually reduce sprawl?
A: Sprawl happens when it's cheaper to build on cheap farmland at the edge of a city than to redevelop an expensive downtown lot. LVT makes holding onto that downtown lot expensive, so owners either sell or develop it. That increases housing supply in the core, making it more affordable to live close to jobs and amenities. People then have less reason to move to the suburbs, reducing pressure for new development on the urban fringe.
Q: Doesn't this just hurt the 'little guy' who inherited a small piece of land?
A: It's a common concern, but the 'little guy' with a small lot is not the target. Most small landowners own their homes and would see a tax cut on the building. The people who get hit are those who hold large, unproductive parcels—often commercial or industrial sites—as speculative investments. If a family inherits a small lot and wants to keep it as a homestead, they can either build on it (which is now cheaper) or sell it (potentially at a profit) to someone who will. The goal is to put land to its best use, not to punish ordinary owners.