When aspiring entrepreneurs don't have to spend as much on land, they have more to spend on their buildings (which creates construction jobs), on their equipment (which increases productivity) and on wages (which creates jobs). Who would you rather have benefit: the last guy who owned the land (or his heirs), or those who need jobs?

When a builder wants to build a home, the size of the home he builds seems to be a function of what he pays for the land: in order to make money on it, he seems to need to create a home which will sell for about 4 times what he paid for the land. If we can lower the price of land, he won't need to produce a mini-mansion to make a profit. Who would you rather have benefit: the last guy who owned the land (or his heirs), or those who need housing near their work?

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Untaxing buildings obviously draws in outside capital, which is good locally, but is not capital formation to the whole economy. In Keynesian models, higher income leads to higher saving, and does create new capital. Supply-siders today worry more about raising the rate of saving from any given income. In supply-side models it is more important to increase the rate of saving, without depending entirely on the Keynesian effect, where higher income raises saving. Also, from the nationalist viewpoint, it is better to supply investable funds from domestic savings, to minimize foreign ownership.

Land taxation helps here, too. Land taxation, if heavy enough to count, lowers the investment value of land, through "tax capitalization". There is a diminishing marginal utility of savings to any wealth-holder, meaning the more you have, the less you need more. With land devalued, those needing wealth seek substitute assets to replace land in their portfolios. To acquire those additional assets they must save more, and invest the savings in real new capital, rather than land.

Untaxing buildings attracts outside capital to an area, but does not result in new capital formation for the economy. In Keynesian models, however, reducing tax on new capital raises the rate of return after taxes (marginal efficiency of capital) and creates new capital. In supply-side models, increasing saving is more important. Land taxation helps here, too.