I think it makes a lot of sense. Like if you have a $100k empty lot taxed at 1% of total value, and you build a $200k house on it, then your taxes go from $1k to $3k, which somewhat disincentivizes building. You might feel pretty comfortable sitting on the lot at $1k/year, especially if values are increasing at more than a few % per year. But if you tax only the land at 3%, then your taxes are already $3k. There’s no disincentive to build, and it’s a lot more uncomfortable to sit on that empty lot, so you develop it or sell it to someone who will.