That's a classic example used by proponents of LVT. But what is another example?
Terry buys a house in a run down, blighted, poor/cheap neighborhood, and along with other neighbors, starts to revitalize it. 15 years later, the formerly blighted neighborhood has become hip, due to the work and care Terry and others put in to it. Property prices increase as rich people want to move to the cool neighborhood, and now Terry has a hard time affording the taxes, and is forced to sell and essentially evicted from the neighborhood he helped build, because a rich person would rather live there.
First of all, LVT are designed to be replacement for property taxes, which already have the problem you describe.
Also, Terry isn't forced to sell to a rich person. He is a rich person. The type of people who like to live in hip neighborhoods tends to be recent graduates starting their high paying career. While they may have more income than Terry, Terry is significantly wealthier than most of them. If he really wants to stay on there, he can easily pay off any property/land taxes with the equity of his home.
They have that problem, but there are frequently programs or legislation designed to reduce that burden. Eg, >10% of Americans are (theoretically) covered by Prop 13. Other municipalities may have laws on the books limiting property tax increases to a certain percent per year. Many other places offer property tax relief programs for people with low income, or the disabled, or the elderly, or generally by increasing exemptions.
As I understand it though, you wouldn't want these programs with a LVT system, because they would just distort the market in a similar manner that it is now?
Yes, because of the property appreciation, Terry can say that on paper, he is rich-ish, but a weird kind of rich where he has nothing but a house in a nice neighborhood, and otherwise has very little money.
How does he pay off the taxes with the equity of his home? A HELOC could work, but he already can't afford the increased taxes with his income alone, so a HELOC would just delay the inevitable and based on his income he probably wouldn't qualify for one.
Or he could do a reverse mortgage, be able to pay the taxes, but put himself at a major risk of losing his home entirely if he lives long enough. Also, reverse mortgages are only available to people over 62.
The only cases I see LVT being seriously considered is alongside further tax and welfare reform, so that regular people have their burden decreased by the increased taxes from those cases where land is not being used efficiently today. So you’d have a basic income, public health insurance, zoning reform, and laws protecting private residential uses of land. You can’t just fix one issue alone here, it comes with a host of economic and financial reforms.
Also, it does have possible downsides compared to today, like your single family home might not be there in a hundred or fifty years when the area needs more density. That’s okay to me, I think humans need to understand land use changes over time and you’re not always going to have a big family home last hundred of years under more reasonable land use laws.
Terry buys a house in a run down, blighted, poor/cheap neighborhood, and along with other neighbors, starts to revitalize it. 15 years later, the formerly blighted neighborhood has become hip, due to the work and care Terry and others put in to it. Property prices increase as rich people want to move to the cool neighborhood, and now Terry has a hard time affording the taxes, and is forced to sell and essentially evicted from the neighborhood he helped build, because a rich person would rather live there.