The Facebook Effect (On Real Estate Prices)

Titleholders that have done nothing to cause the increased value get windfall gains from nearby productivity, simply because the government has granted them exclusive usage rights over the land.

That land value should be taxed, and used to pay for public services, or returned as a dividend to the citizens.

Taxing such unearned windfall gains has a very different economic impact than taxing earned income or sales. Taxing production reduces production. Taxing idle landholding just reduces wasteful land use.

Because taxes only harm supply when the thing in question is a product of human labor. Taxing land doesn't make land go away, like it does for most other things.