The bad part is the part that falls on buildings and equipment. We ought not to be taxing these things at all; to do so discourages the creation of buildings and the purchase and use of equipment.

The good part of the property tax is the part that falls on the value of the land itself. Taxing land value has no negative effects. Taxing land value, even heavily, leads to better land use. Well-located sites get put to good use, with prompt redevelopment by motivated owners, or prompt resale at affordable prices to buyers who can then afford to put a suitable building on the site.
And it inhibits sprawl, because the prime urban sites, served by streets, highways, rail, buses, whatever, get used first: their owners simply can’t afford to keep them underused. This prevents premature development at the fringe, so the farmland remains farmland; the residential ring doesn’t need to expand into it, and some neighborhoods, well served by infrastructure, get redeveloped into denser housing, if that is what’s needed.

Not a single acre leaves town during the night. Not a single square foot can be hidden. Not a single tax dollars falls into the pockets of a middleman. (Ah! There’s the problem! It is efficient! It can’t be evaded! It is cheap to collect!)

We’d all live better if we adopted Land Value Taxation as our primary revenue source. You can learn more about this at http://www.answersanswers.com, wealthandwant.com and lvtfan.typepad.com