That's the same assessments for property taxes work now except that they are looking at the value of improvements in addition to the value of the unimproved land.
Sure, except that there is an objective standard for total value with improvements (the sale price) and there is no such standard for the "unimproved" value of the property. No one is going to tear down any existing improvements and leave the land untouched to revert back to nature for a century or so before putting it up for auction. The dividing line between "improved" and "unimproved" value is arbitrary, and biased against the property owner.
What LVT proponents really want is some kind of oracle that will tell them just how much of the (estimated) market value of a property is due to the direct efforts of the past and present owners of the property and how much is external benefit from the actions of others. Two problems with this approach are (a) there is no such oracle and (b) the "unimproved" value includes external benefits property owners provide to their communities which are not included in the assessed value of any obvious material improvements to their own properties. There is something fundamentally self-defeating in any proposal which would result in taxing people extra for their contributions to the public good.
The idea that land has any "unimproved value" to be taxed is flawed from the start. In fact land has no economic value until someone claims it and puts it to use. If you walled off a piece of land such that no one could reach it, even an otherwise choice parcel in the middle of Manhattan, it might as well not exist. All economic value is the result of human improvements, though they don't always take the form of physical changes to the property. LVT takes physical improvement as a proxy for improvements attributable to the property owner(s), but this is at best a lower bound and significantly understates the owners' own contributions to the property value.
Sure, it's the same process ... but it's now putting a lot more weight something that's more nebulous - just the value of the land. Now, whether the final price of a property is the land or the improvements isn't important and so as long as an appraiser matches the market, they can be considered more or less right, whatever weight.
The situation is almost tautological. I mean, suppose Amazon builds a giant shipping depot in the middle of nowhere. The land was worth nothing before. Without the depot, it would be worth nothing now. Then town arises around giant depot. Town tries to raise taxes on Amazon says "still worth nothing if we leave". Who's right?
