[asokoloski]

You're correct, but it's a completely different incentive. If you hold out and everyone around you improves their property, your taxes go up almost as much anyway! It punishes speculation and rewards productive use.

So a virtuous feedback cycle is created, where everyone is incentivized to improve and develop their property to the point where they're best taking advantage of the land it sits on -- or to sell it to someone who will.

I'm familiar with stamp duty -- it has a lot of problems, mainly around the fact that it discourages people from moving. It seems significantly worse than a land tax, to me.