On November 7, voters in Seattle approved by an overwhelming majority, a measure intended to increase threefold an existing levy that was designed to help the city tackle its serious housing affordability crisis. According to city officials, the new tax would raise nearly a billion dollars in the course of seven years with $700 million to be spent on new developments and the rest allocated for the restoration of existing housing units.

When it comes to housing affordability, Seattle is only second to large metropolitan areas such as New York and San Francisco with average rents hovering around 40% of the average worker’s monthly paycheck. Therefore, a measure to alleviate the rent burden is not only a welcome relief for renters, it could also help improve the local economy as residents are left with more to spend on other things after paying their rent.

While the policy goal is commendable, the remedy is flawed because of a questionable diagnosis of the root cause of the housing crisis. As the city invests in new developments, the demand for land would also increase causing a rise of land  prices. Building more homes is unlikely to drive down prices unless there is a mechanism in place to make land prices affordable. That mechanism is the land value tax proposed by Henry George in his best seller, Progress and Poverty. If the city would just begin by taxing vacant lots sitting idle, that would incentivize owners to sell in order to avoid the tax. Developers could then purchase land at a lower price and build more housing for residents. The housing crisis is ultimately a land affordability crisis. It cannot be solved without addressing the land question.