If you can make 10k revenue and 1k profit building a single luxury home or 100k revenue and 500 profit building a larger housing unit for many families, you’re

If you can make 10k revenue and 1k profit building a single luxury home or 100k revenue and 500 profit building a larger housing unit for many families, you’re incentivized to do the former. If you’re taxed on income you’re incentivized to do the former. If you’re taxed on the max possible value of the land, then your tax rate is based on the 100k revenue, which isn’t so bad if you actually make 100k but is really bad if you only made 10k. Shifting land to large housing use cases is one of the main ideas.