There are various ways to assess the value of property, and taxing value can lead to distortions in the societal best outcome.

When I was a kid my parents were involved for awhile with a non-profit organization that had been gifted a property located in the coastal redwood forest in northwest California. the previous owner was a young man with little else than this land and the value of the land was inflated by the trees to the point that he could not pay the taxes on the land. Because he thought the trees were valuable in their existing location he did not want to log the land to pay for the property tax, so he gifted the land to the non-profit thinking that they could claim some loophole and get out of having to log the land, thereby saving the trees.

Unfortunately, they could not avoid the taxes and logging commenced. The loggers proceeded to start clear-cutting as they were used to handling the logging however they liked. But my dad figured out that the nearby river was a salmon spawning watershed and was able to get the Fish and Game officer to come stop the logging temporarily. It turns out that watershed status does not preclude logging, but there were rules about leaving a certain percentage of trees untouched, so the final outcome was a compromise.

There are a lot of situations like this, where enforcing a purely economic argument leads to poor quality outcomes. To be sure, billionaires use property ownership to dodge taxes, but so do a lot of non-billionaires. Covering every square foot of land with "productive" assets is not intrinsically better that leaving it fallow.