What is it?
A small annual tax, perhaps in the region of 0.5% or 1%, on the value of privately owned land. This can be all such land, or certain types of it: urban residential land, for instance (which would exclude commercial and farm land).
What is the problem that this change would seek to address?
A land tax can address a perceived overinvestment in land/property, and capture some of the “unearned increment” – the increase in the value of land that an owner enjoys without having done anything to deserve it – which would otherwise remain with the owner.
What are the advantages?
A land tax may create good incentives, if it encourages people to use land more productively and shift investment away from property. It is easy to administer, because land is very hard to hide from the tax authorities.
What are the disadvantages?
It discriminates against people who hold their wealth in a certain form; it taxes the most equally distributed major form of asset, while leaving untaxed the most unequally distributed forms (including many financial investments); and it may be politically difficult to tax the land under people’s homes.