No, because the supply of land is perfectly inelastic, and it already commands the highest price that can be obtained.
"A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground."
- Adam Smith, Wealth of Nations
"It is in vain in a Country whose great Fund is Land, to hope to lay the publick charge of the Government on any thing else; there at last it will terminate. The Merchant (do what you can) will not bear it, the Labourer cannot, and therefore the Landholder must: And whether he were best do it, by laying it directly, where it will at last settle, or by letting it come to him by the sinking of his Rents, which when they are once fallen every one knows are not easily raised again, let him consider."
- John Locke, "Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money"
Actually they will be able to ask for higher rents, as with lower sales and income taxes, the renters suddenly have extra cash that will eventually trickle towards rent.
That's if there are actually reductions in income/sales taxes. If the LVT money is instead invested in say mass transit, the population as a whole benefits, but rents don't increase, because money supply doesn't increase.
This is subtly wrong. Taxing rents instead of labor and consumer goods makes leasing less profitable (assuming government expenditures don't favor landlords) and creates opportunities in labor and consumer goods, in which erstwhile landlords can engage.
Milton friedman was an advocate of LVT, and I think stiglitz or krugman as well. There is economic consensus on LVT being good, although how good it is is hard to know, as LVT is a very hard tax to politically pass.
One way of thinking about why this won't happen is that most landlords charge the highest rent they think they can get. They don't just think, "I'll set the rent at my costs and a little profit. I'm not interested in making even more money." Some smaller owners might have personal relationships with their renters and not charge market rates, but I think more and more these days those landlords are rare. Maybe landlords will be able to up the rents because the reduction of other taxes will give people who pay rents more money, but that would be a small secondary effect I would guess.
The landlord can try. But when you introduce land tax and all those vacant apartments and lots come to market suddenly, I'd wish him luck with succeeding to shift the tax burden onto renters.
It's known that land tax together with similar antimonopoly taxes can't be shifted. What's nice is that not only this type of tax doesn't slow down the market, but on the contrary makes it more effective. Essentially without rent capture (antimonopoly tax) there is an open sink in the economy, so no matter how hard people work, all this value exits out of the economy, mostly in form of parked money in real estate.
As George predicted, all technological progress will just yield higher real estate prices and everybody will be working even harder than before.
Thank you for the explanation! I am still not sure I believe that what you predict would happen to a large degree in the Bay Area.
I agree a land tax would push the owners of vacant lots to develop them. But, the NIBMY owners of single family homes will still fight against the building of new apartment complexes and try to constrain housing supply (to prop up their property values). I certainly would hope that more apartments would be built though!
