So, am I to understand that prime beach real estate is to be taxed the same as a plot in a desert or swamp? There is clearly a lot of trouble with taxing land, because an inherent part of its value is what you can do with it. People pay premium for land that is useful and desireable. The structures placed on land and the values thereof are proportional to this desirability and economic utility.
Furthermore, it might be necessary to use land for farming or warehouses when it is more profitably used for residential structures. A free market might eventually sort out higher food prices that can cover the taxes, but I think we can all agree that it's better to not arbitrarily increase taxes on a necessity like food.
> So, am I to understand that prime beach real estate is to be taxed the same as a plot in a desert or swamp?
Why would that be the case? A beachfront plot would likely have a higher value than a plot in a desert or swamp, so the tax levied on the beachfront plot’s value would, of course, be higher. It’s a tax on the land’s value, not a tax on the size of the plot.
The value of land is largely subjective. It is based on demand, among other things. If the government assigns arbitrarily high or low value to land based on hypothetical worlds where the land could be used for high rises, factories, or whatever as opposed to what economics has proven is the best actual use of the land and its best estimated price, that is just a terrible version of the same thing we have now.
Assessors observe market activity. The 'purchase price' when you buy land is based on the highest and best potential use of land. The "Land Value Tax" merely appropriates this observed value for public expense (and potential dividend distribution).
The fact that you compared 'prime real estate' to swampland or desert demonstrates a fundamental misunderstanding of ad valorem taxation and land rent generally. While the rate should be the same (ideally as close to 100% as we can get without causing issues) the actual -value- would be dramatically different.
Under your hypothetical question, the desert and/or swampland could very well have 0 rental value, which means the tax would collect 0 from these locations. 100% of $0 = 0.
Furthermore, it might be necessary to use land for farming or warehouses when it is more profitably used for residential structures. A free market might eventually sort out higher food prices that can cover the taxes, but I think we can all agree that it's better to not arbitrarily increase taxes on a necessity like food.