Owners of real estate already pay property taxes. Are you just proposing that those be increased? And you think that will make real estate more valuable? I'm missing something here...
Perhaps something like an abandonment tax could accomplish this. Force owners to either sell it or use it. Even if they aren't using it optimally, just requiring some minimum usage to avoid a heavy penalty tax could go a long way to eliminating properties that are just tied up by someone hoping the value goes up eventually.
Sure, or an additional tax on unused or barely used real estate if we wanted to be targeted, but really I like the broad property tax.
>And you think that will make real estate more valuable?
No, I'm not trying to make real estate more valuable, actually I'm trying to make it less valuable by ensuring that the high levels of competition we see in booming real estate times carries over to the busts. If the costs are so low that people are just sitting on these properties and waiting for a magical moment when prices rise then obviously costs need to be increased to pressure these people to enter the market. Liquidity shouldn't drop when prices drop.
I won't be surprised if we don't see this happen...
It actually depresses the price of land, by socialising the positive value. But it also increases the available supply, paradoxically: given that land is price-inelastic, the supply doesn't change relative to price. Increase the carrying cost and the result is that landlords must sell or rent in order to cover costs. This is particularly associated with Henry George, though his work was based heavily on David Ricardo and Adam Smith.
https://en.wikipedia.org/wiki/Land_value_tax
http://www.ft.com/cms/s/2/392c33a6-211f-11e3-8aff-00144feab7... (Alternate: http://archive.is/iQMRn )