An enterprising, productive man goes to a realtors office in a town wanting to build a factory, so needs some land for the factory.
The agent says:
"I have the ideal plot". She takes him 45 minutes out of town via a fast highway, 30 minutes down a small road, 10 minutes across track and points to the land surrounded by scrub. "There it is", she states, "$5,000".
He said:
"there is nothing here. No electricity, roads, water, buildings, people, nothing".
She says
"I have another the size you want." They drive back to town.
The plot is in town near to:
- A rapid-transit rail station,
- A fast road with modern tramcars on it,
- Bus routes,
- A housing estate
- Great schools,
- A world renowned hospital,
- Excellent university,
- Police station - Crime is low because of the excellent well funded police force,
- Fire House - the fire department is top rated and swift to emergencies,
- All utility services are adjacent to the plot, etc.
- A pool of high skills - skills base of the people is very high,
She says:
"it has all the top class services you need here".
He says:
"ideal, wonderful, who do I make the $5,000 out to?".
She says:
"it is $1,005,000, as it has all the top class services".
He said:
"It is the same size as the first plot. But mmm, well OK, I'll pay that, as it is ideal, who are the people, and their addresses, I send the cheques to who provide these wonderful top-class service?".
She says:
"no you have to pay the $1,005,000 to a man who lives near the beach in the Florida and lays on it most of the day".
He says:
"well its the same size as the out of town $5,000 plot, so I will send him $5,000 and cheques to those who provide the top-class services".
She says:
"no all has to go to the landowner laying on the beach in Florida".
He says:
"how do these people pay to provide all these services then?"
She says:
"well you pay Property Tax, Income Tax, Sales Tax on the goods you sell, tax to the council and government and all sorts of other fees and taxes, and they provide the services".
He replies:
"well I pay for these services twice then, that doesn't sound fair at all".
She says:
"well yes, you pay once to the landowning man laying on the beach in Florida and again to the authorities. He does not pay taxes on this plot as it is not used".
Land Valuation Tax (LVT) on the urban plot would pay for the services. The value is higher on the urban plot than the out of town plot which will pay less LVT as its value is less because of the lack of demand because of no services.
The winner is the free-loading landowner who got rich in his sleep and laying on the beach, who paid sweet nothing for the services that made his land valuable.
The man of enterprise and production is paying twice.
Next time you buy land or a house, think of that. It is not an American thing to pay twice for something.