The difference would be negligible unless the land is valuable enough that more improvements could be supported by local services and demand. For example, if y

The difference would be negligible unless the land is valuable enough that more improvements could be supported by local services and demand. For example, if your home sits in a hot area where there is high demand for apartments, the home with the larger lot would pay more taxes because the potential for the lot is much higher. Once the lot built to its potential, the tax per occupant would level to a fair cost per local government service used. Of course, the owner can continue to pay a higher tax burden to use more of the lot for themselves. Because they own the lot, the government can’t force them to do anything else. That’s how it should be. No government intervention / lease needed, just incentivize development by asking owners to pay an appropriate tax amount for the value of the space they occupy and let people make their own choices.