> But the places that you are substituting for, assuming the landlords there are self-interested, would also wish to charge the full rental value for their land.
Of course they do. But land doesn't have an inherent full rental value, it has a value for particular uses. If land in place A that is used for use X becomes more expensive because the landlord is trying to rent it for more than the minimum price to meet his economic costs with no economic profit, land in place B whose highest-value use was the less-valuable use Y (given that land A was already being used for X, driving the marginal value of additional X down below the marginal value of additional Y), might become viable for X at a price greater than it was already able to charge for use Y, but lower than A was trying to charge.
This potential for substitution is what distinguishes a competitive market from a monopolistic one. Now, substitutability of land is sharply limited when transport costs are high relative to the value of the things provided by the uses of the land, which was true to a greater extent when Ricardo and Smith were writing than it is today (and, given geography, is -- even with similar technology -- often going to be true more on average in Britain than in the US.)
In land rents as in most other markets, taxes on the supplier (the owner offering the land for rent) -- like other costs -- are in part passed on to the consumer, and in part born by the supplier, reducing the quantity supplied at any given price and increasing, all other things being equal, the market clearing price. Land rent is, in practice, not fully monopolized so that taxes on it only reduce monopoly rents (and even if it was fully monopolized, this would only be the case if the taxes were less than the premium taken as monopoly rents for the property where the least premium was able to be charged.)