The taxes should indeed go up to optimize land use in general.<p>If you have a house built in 1902 in the middle of a big city, you&#x27;re paying minimal taxes and find yourself surrounded by high-rises, it&#x27;s very inefficient land use. Your lot could provide housing for hundreds if not thousands of people if another high-rise was built there.<p>Thus, you should either pay for your privilege (in taxes) or sell the lot (for a lot of money, presumably) to let other people use the space more efficiently.<p>However, I must say that a property tax itself is a wicked one and should be replaced by land value tax. Land is more valuable in the centre than in the outskirts of the city, so when properly taxed it creates the tendency to increase density of the highly taxed land and allows for more liberal land use where nobody else wants to build.