It is conventional wisdom among economists that Land Value Taxes (LVT) are more efficient and equitable than taxes on production. When wages are taxed, people are less incentivized to work, thereby reducing total productivity. Since work that is never performed cannot be taxed, nor benefit the worker or their employers, the total social costs from taxes on production exceed the revenue generated by the state, generating “deadweight losses” for society as a whole. The same is true for taxes on saving, reducing people’s incentive to save, or on exchange, reducing the benefits of trade. The major exception from this rule are taxes on land and other naturally occurring resources. Since land is not created, taxing it does not reduce the amount of land, making taxes on the value of land uniquely economically efficient. By shifting taxes from productive activities, such as work, savings, and exchange, to land values, we could consequently increase productivity, growing the economic pie for everyone.

Despite its benefits, land value taxation remains rare. Why? There are many potential explanations. One possibility is political resistance among homeowners, who worry that the sales value of their homes would fall in response to land value taxes. Moreover, people tend to dislike taxes on unrealized economic gains. Despite these challenges, the last few years have seen steps toward the implementation of land value taxation in the German state of Baaden-Württemberg and in several American counties. Furthermore, the recently elected UK Prime Minister Andy Burnham has repeatedly expressed support for land value taxes. Consequently, we may be in a window of opportunity for a shift towards land value taxation, especially in the UK.

The aim of this project is to investigate the possibility of utilizing this window of opportunity. One powerful way of moving the needle on political issues is to “do legislators homework for them”, preemptively responding to the questions they would face in the policy process. Thus, the project would seek to identify, and if possible, try to also address, the main hurdles to a land value tax shift in the UK.

The intended outcome of the project is to produce a policy report that draws upon previous literature, interviews with politicians and other policy-relevant actors, and lessons from previous efforts for LVT implementation, outlining the main challenges and opportunities for an LVT shift in the UK.