A tax on land results in an income effect on landlords but no substitution effect. Then it follows that the excess burden of a tax on land will be zero.

Question

Quizplus · Accepted Answer

A tax on land does not change the supply of land, as land is perfectly inelastic in supply. Therefore, there is no substitution effect, and the tax does not distort economic decisions, resulting in zero excess burden.

A Tax on Land Results in an Income Effect on Landlords