Taxing land-values may distort the choice between earlier and later development of unused parcels of land in favor of projects that promise an earlier stream of revenue. This may distort efficient land use.

"In particular, the taxing of land-values may distort the choice between earlier and later development of unused land parcels in favor of those projects that promise an earlier stream of net receipts. The implication of their models is that a movement in the direction of land taxation may hasten economic development, perhaps to an extent that is excessive on purely efficiency grounds. This effect, however, depends upon an important and controversial assumption concerning the way in which land is valued for tax purposes. Where this assumption is satisfied, land-value taxation can have what we will call a timing effect."

theoretical