Land Value Tax - Economic Effects

Economic Effects

The value of the land (and many other macro-economic quantities too) can be expressed using two independent concepts:

• The value, or, strictly speaking, the price, of a particular site of land is what a fair exchange brings in terms of money during an agreed trade or transaction between two parties, one of whom is the landowner. (This definition is conditional on no LVT being applied, because when it does apply, the exchange value is affected.)

• The land value of the site is also directly related to its demandable ground-rent, which is its potential for use in either production or residential capacities. The capitalization of this rent gives the land value too. Land which is not useful has no value and is called marginal land, as explained by British economist David Ricardo in 1816.