The purpose of this paper aims at studying the relationship between enforcement of tax assignment system and local governments' land finance in mainland China, and discuss its problems and impacts. Firstly, Due to tax assignment system and finance transfer payment system were not perfect, local governments' extra-budget fiscal revenue was gradually dependent on land finance. Secondly, local governments make profits by the land, this motivation creates large expropriated land and then to earn high profits in the form of ”expropriated land rent.” The standard procedure includes expropriation of land in low compensation and lends the land in high prices. Although this profit-making approach gains the large amount fiscal revenue, but actually produces rent-seeking behavior and corruption. Thirdly, land finance become the main source of budget of the local government and produced many deficiencies, including lack of instability and sustainability on finance, increase housing and land price, decrease efficiency of land use, produce financial risk, accelerate the city and countryside disparity and the income differential, and endanger the social stability and affect the harmonious construction. This article proposed that certain suggestions which alleviates deficiencies of land finance, including reforming asymmetrical distribution of fiscal power and responsibility of affairs in tax assignment system, improving finance transfer payment system and strengthening local authority's supervision role.