Nineteenth-century economist and writer Henry George famously argued that the value of land is created by the community through investment in public works and therefore the economic rent of land is the most logical source of public revenue, and it is, sort of.

In most US cities (Anchorage included), property taxes are assessed on a valuation formula that combines the assessed value of the land and the value of the improvements (the house or building). However, this is not an equal formula and most of the taxable value of a property lies in the value of the improvements (the building). The more valuable the improvements are, the higher the taxes will be. Sounds counterproductive, right?

As the name implies, a land value tax (LVT) simply shifts most of the taxable value of a property to the land itself rather than the value of the buildings on it.

Proponents of an LVT argue that the current tax structures disincentivize investment and reward neglect. Property owners are less likely to want to improve their properties if their taxes will go up as a result. This also encourages sprawl by pushing development further away from established neighborhoods and the urban center.

In downtown Anchorage, we have a perfect example of the effect of real estate speculation: surface parking lots. The improvement value of asphalt, pay-boxes, and lighting is very low compared to buildings, giving the owners of parking lots an effective means to park their investment. The parking fees collected at the lot are generally enough to pay the taxes and utility costs enabling the speculator to hold prime downtown real estate until the value is high enough to consider selling. This is an example of how current tax laws reward inaction and keep speculation viable.