I don't believe it does 'distort' the market when it comes to land.
It's not a matter of belief, it's a fact. Market prices are those determined by voluntary transactions. Taxes are coercive, not voluntary. Any alteration taxes provoke on prices is a distortion of the actual market prices. And taxing only a particular kind of good (land), provokes an unbalanced distortion.
Thank you for pulling me up on this. As I wrote it it didn't feel quite right. You are correct in that if we consider market prices as determined by voluntary transactions to be the determinant of price then anything else does by definition 'distort' it.
And of course the terminology you use to say 'coercion provokes an unbalanced distortion' makes that look like a terrible thing - as it is I believe when applied to productive and consumptive activities. Although I can see the 'end-of-chain' argument making VAT in a way maybe the one that affects productive activities least it is still hindering the beneficial cycle of commerce.
Taxing land simply doesn't. To the contrary.
I agree with the principle of not interfering with markets relating to capital and labour because yes, it does distort prices making it an uneven and unjust playing field. But the reason people mostly apply the same to land is because neo-cons and ancaps tend to bundle capital with land and call them both capital. But classic economics differentiates between land, capital and labour, recognising land to be a special case.
Land can certainly be capital if used as such, capital == means of production. The land of a farmer, for ex., is part of his means of production. So it's his capital...
Ah, OK I had forgotten ancaps tend to go one further than the neo-cons and mush all the various elements that make up the means of production and call it all capital! Of course then you can take rules that normally apply to capital and apply them also to what others might call land or labour. Classic economics finds it useful to recognise essential differences between the elements that make up the means of production. Smith talks in terms of
' labour, land, and capital' and the Wikipedia
'Factors of production' also refer to the three as being distinct.
If we don't mush up the terms into one we can say the land of the farmer is, along with his capital and his labour, his means of production. The three certainly have many attributes in common but one of the beauties of not mushing them together is that it also gives us the freedom to see what is different about each.
...by taxing land only you'll create a burden on only this kind of good.
But it is only by bundling land under capital that you can then further classify it as a 'good' which it isn't if we're recognising the fundamental differences that caused it to be considered separate from capital in the first place. Labour isn't a 'good' neither is land - only things in the Capital classification are 'goods'.
The usefulness of something to society is not to be determined by you nor anybody else. You don't get to say that land is more or less useful than other goods. That's something to be decided by people's actions and their subjective evaluations.
My subjective evaluation is not that 'land is more useful than other goods' but that it is not a 'good' and that its distinct attributes means it can be treated differently to 'goods'.
People's actions and their subjective evaluations will determine how much someone is prepared to pay for a property. If there is a tax to be paid this will eradicate any increase in future value arising from its location so the amount someone is prepared to pay will be less - there will no longer be a virtually guaranteed appreciation in value due to demand in that location. Call it a distortion if you like but it means the considerations in evaluating the property are now limited to its productive capacity and/or desirable features. From my perspective it has taken out the 'distortion' in price caused by speculation.
Land is of limited supply. The degree by which its value increases (other than by direct improvement by the owner) is determined by demand which is determined by its location - and the difference in price between various locations is a consequence of all economic activity and amenities in those locations. Everybody who makes a positive contribution to commerce and amenities in one location has contributed to the increase in value of the land. If it so happened that the proportion of contribution matched the proportion of the land owned then it would be easy and fair. But it isn't. Landowners in the absence of a land tax reap the benefit of the work of others - and by looking at it through the eyes of current economic paradigms actually believe they have 'earned' the increase in value. In the meantime the next generation and newcomers have less and less of a chance of finding somewhere to live they can afford - whether to rent or to buy - because as illustrated by my Bitcoin comparison earlier, hoarding land with virtually no risk of it going down in value (providing others keep up the good work) keeps swathes of land under-utilised.
