“The literature examining the link between the intensity of urban land use and methods of local finance is examined. The widely held notion that the switch from a general property tax to a land value tax would increase land use efficiency, reduce urban sprawl, and help preserve the environment is challenged. The traditional view of land development holds that a tax placed on land is capitalized and leaves resource allocation unaffected. No excess burden is created because developers and landowners can do nothing to reduce their tax liability. Taxes on improvements to land, however, create burdens that can be reduced by lowering development density and causing the city to spread more than it would under neutral tax. Recent theories challenge this view and suggest that, under certain conditions, the land value tax promotes urban sprawl more than does the property tax. Variants of the land value tax as applied in special districts appear attractive, but the empirical literature is inconclusive as to the spatial consequences of land taxation.”