LVT (Land Value Tax), unlike other taxes, causes no distortions in economic decision-making and therefore does not compromise the efficiency of a market economy. While there have been various challenges to this conclusion, it seems that the neutrality of LVT has been proven in the literature. Although it has been established conceptually that LVT is non-distortive, it is important to empirically test the effects of LVT reform in diverse aspects. Unlike other studies, this dissertation examines the economic, spatial, and welfare effects of LVT reform in a second-best situation employing an urban (and spatial) CGE (Computable General Equilibrium) model. In addition, it examines the distributional effects among different income groups and the short-term aspects of LVT as well. The feature that the present dissertation incorporates as the second-best situation includes LLZ (Large Lot Zoning). The computation and the assumptions about parameters for the current CGE model are made based on demographic, physical, and economic features of the Atlanta urban area in Georgia. The results suggest the following: (1) LVT reform is economically feasible, (2) the tax on land rent stabilizes prices and contracts the CBD (Central Business District) and urban boundary in the economy where the CBD and urban area are endogenously determined, while the tax on land rent is purely neutral in the economy where the CBD and urban area are fixed, (3) LVT reform increases the money-metric welfare of residents by about 20% of the tax revenue in the economy where residents are landowners, while LVT reform increases the money-metric welfare of residents by about 45% of the tax revenue in the economy where the lands are owned by absentee, (4) LVT reform more increases the money-metric welfare of the less-income groups that own the smaller land area, which is contrary to the case of LLZ, (5) LLZ and property tax can cause the sprawl of an urban area, but at a very low elasticity of substitution between land and the other factors (0.1), even switching from the land tax to the property tax (or graded property tax) can contract the urban area, (6) LLZ, in the long-term during which housing capital and urban boundary are not fixed and in the economy where residents are landowners, can improve the welfare of households, while LLZ worsens the welfare of households both in the economy where the lands are owned by absentee and in the short-term during which housing capital is immobile in any economy, (7) When we consider that housing capital is immobile, the increase in the money-metric welfare due to LVT reform becomes weak, compared to the case with perfectly mobile housing capital.