This result may seem counterintuitive, since the parcels with high improvements gain the most from the lower tax rate on improvements. However, these same properties lose even more from the higher land tax because of their high land value. Applying this basic intuition to mixed land uses suggests that with a shift to a graded tax, many commercial and industrial properties would face higher taxes, while single-family homes would generally benefit from lower tax bills.
In sum, the distributional effects of a shift away from property taxation in favour of land-value taxation are more complex than first appears. Moreover — and this point is the important one — the distributional and land use effects of such a shift depend heavily on whether the tax restructuring is done in a single city or in all cities. The positive effects on economic development touted by proponents of land-value taxation emerge more strongly when the restructuring applies to a small part of the metropolitan area rather than the whole area, and reflect the reduction in the property tax not the increase in the tax on land value.