[hammersklavier]

This is why we need to have property taxes be more weighted to land value than improvements.

It is patently obvious that a parking lot within a block of Rittenhouse Square is hardly the site's highest and best use. However, it is the use with the least amount of improvements the site requires to be productive, and therefore the cheapest use to maintain, from a tax perspective, in a property taxation system that focuses on taxing improvements.

And therein lies the difference between land value and improvements schemes for property tax: Improvements taxes tend to incentivize the least amount of improvements the land will bear to be financially productive, which in turn over time undermines the viability of greater improvements outside the PLVI area proper. It turns cities into parking craters.

By contrast, land value taxes place the primary tax burden on the far less elastic value of the land itself, and in so doing incentivize building to the maximum improvements the land will bear, as (unlike with an improvements tax) a land value tax will not change a property's valuation dependent on whether it bears (a) a surface parking lot, (b) a 5-story building, or (c) a 50-story building, the way that improvements taxes do.

It also occurs to me that another way to explain this is that a land value tax cares less about the minutia of the built form and more about assay how in demand the city itself is. An in-demand city, that is, should have upwards-trending land value taxes, while a déclassé one downwards-trending land value taxes.