Values are not simply proportional to rents because many land values are elevated above that by expected higher future rents. In such cases taxes rise high relative to cash flow, and at a stiff rate may even be higher. This subjects the holders to a cash drain. The extra tax may be shown, however, in general to tax the unrealized increment, in the manner advocated by Haig-Simons, at the time it accrues. The most controversial question in land taxation is the effect on appreciating land.
Most hands agree the land tax advances conversion to the higher use.
To several modern writers following Richard T. Ely the advance of conversion is unneutral and somewhat wasteful. Speculation is seen as efficiently keeping land from premature commitments. To this writer it seems mathematically obvious that an efficient adaptation to rising future incomes would result in advancing, not retarding conversion. But the issue is now moot. Land taxation by a central national government might go much heavier, and accordingly statesmen like Austen Chamberlain in Britain and James Madison in America have contrived to divert land taxation to local governments.