As suburban development drives up the price of farmland in the suburbs, inheritance taxes may force the children of farmers to sell the farm just to pay the taxes. To revitalize cities and prevent destructive sprawl, each of these subsidies to the suburbs should be reduced or terminated. But that is not all. SA suggests that the property tax could be shifted in an interesting way to reduce the incentives for sprawl. If the property tax were taken off of urban buildings and focused on the land beneath the buildings, this would penalize land speculation and would reward people who built on their land.
Land speculators hold land undeveloped, hoping to earn a higher price in the future.
Urban construction creates urban jobs. As things stand now, as urban buildings decay, owners often don't make repairs because their property tax will rise. Thus the typical property tax creates an incentive toward suburban sprawl and urban decay. Shifting the property tax from buildings onto land reverses these incentives. Taxing land more than buildings will reduce taxes for homeowners.