remain unchangedA tax on land will ultimately fall
Answer Details
A tax on land is a form of tax that is imposed on the value of a property or land. The incidence of a land tax determines who ultimately bears the burden of the tax. The incidence of a land tax is determined by the relative elasticity of demand and supply of the land.
In general, the incidence of a land tax falls entirely on the landowners. The reason is that the supply of land is inelastic, which means that the quantity of land supplied cannot be easily increased or decreased in response to changes in the market. Therefore, if a tax is imposed on land, the landowners cannot reduce the supply of land to avoid the tax. As a result, they will have to bear the entire burden of the tax.
However, in some cases, the incidence of a land tax may be partly shifted to the users or renters of the land. This may occur if the demand for land is more elastic than the supply, meaning that users or renters can easily substitute other types of land or property to avoid the tax. In such cases, the landowners may reduce the rent they charge to attract or retain tenants, thereby shifting some of the tax burden to the users or renters.
In summary, the incidence of a land tax ultimately falls on the landowners, but in some cases, it may be partially shifted to the users or renters of the land, depending on the relative elasticity of demand and supply.