In many states, property tax is the primary source of income for local (county, city, fire district...) governments. Conveniently, those governments provide services to people using that property (social services, road maintenance, putting out fires...).
The economist-minded folks might also point out that if someone has a lot of land and not much income, the land isn't being used very effectively, so having to sell because taxes are too high will increase the efficiency of used. (I have some philosophical issues with this line of reasoning, but it's got a point.)
On the plus side, it means that if you live in a rural area but work and shop in the city, your house in the country gets a paved road, a sheriff's department, and fire protection. It also means school districts in areas with high house prices are better funded that districts in poor areas where parents are less able to compensate for a school's shortcomings. It's not a perfect system, but it works fairly well.