A tax on the value of land is likely to be fully capitalized.

Question

Quizplus · Accepted Answer

A tax on the value of land is likely to be fully capitalized, which means that the burden of the tax will be passed on to the owner in the form of lower land value. This is because land is an immobile resource, and the supply of land is fixed. As a result, any tax on land will not affect the amount of land available, but will instead reduce the net return that land provides. This reduction in net return will lower the price that buyers are willing to pay for land, which means that the tax will be fully borne by the owner of the land.

A Tax on the Value of Land Is Likely to Be