We show that the presence of heterogeneous locations may radically change taxation by utilitarian governments both with and without migration. A key mechanism is that income redistribution between the rich and the poor affects property values (land rents). In a closed economy, a Utilitarian government may transfer income from the poor to the rich in order to reduce rents accruing to absent landlords. When the rich become mobile, a Utilitarian government may increase the tax levied on them, opposite to the standard models in which mobility of the rich leads into a race to the bottom in their taxation.

JEL classification: H21, H7, R21, R23

Key words: Taxes, land rents, property values, migration, redistribution.

Length:  38 pages