On the land value tax, you have to pay more tax specifically because its value increases. If you want to cash out, then sell the property for it's now much higher value. The value didn't increase because something you did personally, rather because the whole area became more popular due to you and your neighbours (or more usually, your tenants) moving in and being productive. It seems fair that this value that everybody added to your property would get distributed to everybody instead of just you, the owner.
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Everyone who helped raise the value deserves a cut; that’s a good point.
That does not, however, seem to be a real justification for giving a check to a person a few towns away who does not own any property and who didn’t improve our neighborhood. What’s the justification in your model for giving him a cut?
Copy of my other responder to a parallel comment:
There is an opportunity cost for society from every piece of land we cannot use for something new. That's reflected by the value of the land. If the value to the owner is much lower than the value to someone else, we aren't using the land efficiently.
It's also unearned income. It's ideal to tax unearned income because you don't create negative incentive for desired activities. It's in essence a tax that comes at no cost to society.
I hear you. Our system is profoundly bad at taxing unrealized gains, though, for some pretty serious reasons. (See also, wealth tax).
You are right, to some degree this would be taxing unrealized gains which IMO is generally bad. The important part though is that it's taxing a negative externality (the opportunity cost for society).
And once you cash out, you'll have to pay taxes on the profit you make. A land value tax would make live harder for the people living in their homes, as their CoL increased without them having any new income, while landlords would just increase rent accordingly (and could easily do so, as everyone would increase rent).
The solution to all such complaints about property taxes is to have very little tax for people's primary residence, and apply high taxes for all other properties they own.
This also has the effect that being a landlord is disincentivized, and property prices have a downward pressure which allows more people to become home owners.
> have very little tax for people's primary residence
Homeowners already get crazy tax breaks that our society bears the cost of. This would just be an even bigger shift to funding government services on the backs of renters rather than homeowners, as any increase in taxes that "landlords" are assessed is passed on to renters.