# Why doesn't land value go to 0 when tax rate goes to 100%?

I'm looking at this equation here:

$$y = \frac{ra}{r+x}$$

Where:

• $$y$$ = market value of land
• $$r$$ = real interest rate, set at 0.01
• $$a$$ = land value, set at 1
• $$x$$ = tax rate

I don't really understand this equation conceptually.

• The easiest way to think about this is to consider the fact that you obtain value from land ownership that is not taxable. – 123 Dec 28 '18 at 16:05
• And this extra value left over after a 100% tax rate is that untaxable value? Can you explain? – AntiTruthist Dec 28 '18 at 16:17

$$y=\frac{ra}{r+1}=\frac{0.01}{1.01}\approx0.0099>0$$