Land value; DHCD to study tax implications of allowing localities to implement a tax.
The study mandated by HJR451 will analyze various aspects of implementing a land value tax, including potential revenue changes for localities, economic benefits or challenges that may arise for residents, and any constitutional concerns that this tax system might provoke. Moreover, it will look at the experiences of other states that have adopted similar tax systems. The findings are set to be reported back to the Governor and the General Assembly by the first day of the 2026 Regular Session, highlighting the necessity for an informed legislative approach to this taxation strategy.
House Joint Resolution 451, introduced on January 8, 2025, seeks to request the Department of Housing and Community Development to conduct a study on the tax implications of allowing local governing bodies to implement a land value tax. This type of tax is levied on the value of land separately from the structures on it, meant to encourage development while discouraging speculative land holding. Presently, only specific cities in Virginia have the authority to impose such a tax, and this resolution aims to explore broadening that capacity across all local governments in the state.
While proponents of land value taxation argue that it can generate necessary revenue for localities without exacerbating the financial burden on residents, critics may see it as a form of increased taxation that could impact property owners differently, particularly those who have invested heavily in property improvements. The implementation of a land value tax might also raise discussions on fairness and equity, as it alters the property tax landscape in favor of taxing land value exclusively rather than considering improvements, which could be seen as benefiting developers over homeowners.