Suppose that only within the city limits there is a wage tax of 5 per cent. No, but the house costs as much to build, no matter where it's located, so the tax on wages reduces the value of land. Suppose you live in the suburbs. Either way, the tax adds to the cost of production. However, the building and other costs of production remain the same, so the tax diminishes the value of the location.
All confiscatory taxes diminish the value of land.
In the worst areas of cities, taxes that fall on wages, buildings, and economic activity add up to even more than the value of the land. This prohibits all profitable reinvestment. We know this because properties are often abandoned by their owners, and cities have trouble finding anyone who will take those properties without charge and rebuild them. In the profitable areas of the city, taxes are absorbed by even higher land values. This is evident because in spite of the taxes, people pay thousands, and millions, of dollars to lease or purchase land.