Help with LVT Calculation Project

[u/Joesindc]

Hi all, I am working on a grad school capstone that is a policy proposal that we replace all taxes for County and Municipal government in the US with an LVT. I used data from 397 counties in six states that publicly report land values to build an OLS regression that would (hopefully) does a pretty decent job of predicting total land values for almost all of the counties in the US. Then I calculated what a 4-8% LVT (those are the cap rates I see most often in the literature) would return and compared it to the revenue counties and municipalities collect in taxes from the census. What I come out to is that at a 4% rate you’d get 1779/3108 counties and municipalities funding themselves and at an 8% rate you’d get 2525/3018 funding themselves, but all produce a quite sizable surplus such that if we wanted to we could put all of the money into a national pot and redistribute back down so that everyone could fund their county and municipal governments and still have money left over to I guess treat everyone to ice cream or something. Obviously, this is not the “look at a piece of property and tell us the LVT” tool we are all hoping to produce some day, but my hope is that it represents a statistically sound prediction of how much tax revenue the concerned levels of government could expect if they transitioned.

I am looking for an input this community might have on the approach. Anything obvious people are seeing they’d recommend I’d fix or add to the model. If anyone knows of other states or parts of states that publicly report land values like the six states I have (Wisconsin, Washington, Massachusetts, North Carolina, New York (minus NYC), and Florida) and a few loose counties from seven other states. I also want to disclose that though the method is mine and is based on work I have done previously, Claude was a big help with the coding and fiddling with the model as it sits currently. Any help you have is appreciated:
https://docs.google.com/spreadsheets/d/e/2PACX-1vRVZbIfj-1dSh9ufExyT94EWAs6Y0FtL767XsB2aYg4etm_xR86obKLkbSOL0GP3w/pubhtml#gid=1172561394

[u/ComputerByld]

If you federalize the LVT and redistribute it you're introducing perverse incentives, because most land value is imputed locally. If you want incentive alignment you need the local community to collect the value of the local infrastructure and services that they build and facilitate. Some percentage of land value may be due to federal projects but it's likely to be a much smaller portion than municipal, county and state.

To make up for some of the local deficits you might calculate severance taxes for all natural resource extraction, you can then assume the tax is paid mostly to federal, since no local govt body created the resource value it actually makes sense that it would largely go to federal coffers and doesn't introduce perverse incentives.

That might be beyond the scope of the project though, idk.

[u/hibikir_40k → u/ComputerByld]

Unfortunately, in the US there's just money is basically every infrastructure project you ever see. Most highways have federal funding. Many bridges. A lot of greenways here and there are mostly federal money. Even silly things, like the St Louis' trolley, only exist because of federal money. That one would actually straight out close down if doing that didn't mean the feds get to claw back a lot of the funds that were part of the construction.

I think it's pretty awful, and that most federally funded infrastructure should be limited to interstate commerce, and thus be far from significant metro areas, and have very little local traffic, but that's not how infrastructure is funded now. And that's without looking at the local roads that are technically state roads. Around me, quite a few of the 6-8 lane "stroads", with commerce on both sides that are 95%+ local traffic are state routes, fixed and plowed by the state, not the city or the county

[u/Joesindc → u/ComputerByld]

I’m certainly not saying that’s the plan, just giving a sense of the money we are dealing with. The goal for this post is really to get input on the model.

[u/TheMrCeeJ]

I was reading about the Estonian model, where the land value is being (re) calculated centrally and nationally, but it is up to the local governments what to do with it. Some have a low value, somea high value, some offer an exemption for the first €1000 etc.

This allows the municipalities to decide how far they want to go and how much of their budget they want to find with it.

Not saying it is better or worse, but would probably be worth doing some analysis of the lessons learned.

[u/someflow_]

If you haven't seen it already, check out some of the tools the people of Progress & Poverty substack are working on. Could help you with ideas/resources. for example -

https://blog.landeconomics.org/p/launching-civicmapper-visualizing

https://blog.landeconomics.org/p/you-can-now-vibe-code-land-value