DEFINITION of 'Land Value Tax - LVT'
A tax on the value of a piece of land. Land value tax inherently makes up a portion of all real estate property tax; however, land value tax takes only the fair value of the land into account. The taxation of land is very straightforward, requiring only a valuation of the land.
BREAKING DOWN 'Land Value Tax - LVT'
Some argue that land value tax is the best tax in terms of economic efficiency. Since the availability of land is inelastic, the value of land is therefore determined by the rules of supply and demand.
Land value taxes are implemented in numerous countries around the world, including the United States, namely in Pennsylvania.