If it was levied on the value of the land alone, there's no such thing as unreasonably punitive: land values would just drop until the tax is priced in.

If you look purely at economic efficiency, and leave out any morals about _who_ should be taxed, the only thing keeping taxes from going up all the way to taking everything is economic inefficiency. Ie if you heavily tax a particular widget, people will produce fewer widgets.

Land is fixed. You can't produce it, thus no tax can interfere with its supply. (Unless it's a tax system that incentives you to keep your land off the market, like negative gearing in Australia (https://en.wikipedia.org/wiki/Negative_gearing).)

However, if the tax was levied on the value of land plus building on it, a high tax would discourage building houses---whose supply is emphatically not fixed.

I really like this idea, except that "market value" is vague, and would require a bit of work to determine accurately. Maybe the best you could do would be to have a by-block square footage to value chart to be used for these purposes (and you would want a definitive source anyways, to prevent gaming the market value side).

This could also help quite a bit with the property owned in New York as a way to launder money[1].

1: http://www.npr.org/sections/money/2016/05/27/479717380/episo...

Ie you probably would want to tax under-occupation as well. (Otherwise you just declare a bunch of apartments as a single unit, and have a single dude check in every once in awhile. They did that in Britain, because of different legal treatment of trespassing between empty and `occupied' buildings.) But how do you define under-occupation? Where do you draw the line?

Just use a land tax. It's simpler and harder to evade.