Land value tax would replace other taxes such as income tax.<p>I don&#x27;t see how the market would absorb this tax. Rent is set at what the market can bear. If you raise further in light of being taxed more your renter cannot pay.<p>Rents are set by wages. Land values are set by the ability of banks to lend against land based on the price they just lend on ... land, all &quot;financed&quot; by fiat money created by banks.<p><a href="http:&#x2F;&#x2F;www.economist.com&#x2F;blogs&#x2F;economist-explains&#x2F;2014&#x2F;11&#x2F;economist-explains-0" rel="nofollow">http:&#x2F;&#x2F;www.economist.com&#x2F;blogs&#x2F;economist-explains&#x2F;2014&#x2F;11&#x2F;ec...</a><p><i>&quot;Land value taxation is so beloved of economists because, in theory, it does not distort decision making. Suppose a land value tax of one per cent on land value is introduced tomorrow. There can be no supply response: there would still be as much land as there is today. Neither would consumers’ preferences change, as land would be no more useful, either. So if the market for land is competitive, no transactions would be deterred or encouraged. All that changes is the price, which falls until it exactly offsets the discounted cost of paying the tax forever. The buyer assumes the burden of paying the tax, so all things considered is no better or worse off. Landlords are unable to pass the tax on to tenants, because the supply and demand of rented land is unchanged too. Furthermore, if LVTs replaced property taxes, incentives against improving homes and developing land would be removed. Yet LVT would continue to account for &quot;undeserved&quot; gains landowners make on the investment of others, such as the government improving nearby transport links (this feature of the tax appealed to Winston Churchill).&quot;</i>