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Dialogue With a Professor on Economic Rent

When asking about what things should actually be taxed. The curious thing is he has never heard about the term 'economic rent' or at least did not understand its cause and effect. The only thing which all sides in political economy agree on.

Yes thats a good question: by rights what should be taxed.

Surely it is anything for which you have received a benefit, which was provided by that authority? In other words, taxation based on benefits received.

Presently taxation is based on ones ability to pay it, regardless of where it comes from. There is no accounting for if one received a benefit from paying it - you may have paid too much and been scammed or too little and got a windfall. All that matters to the authority in today's distorted world is that you are able to pay it. Sure, it might be possible that the tax was taken and by accident it matched perfectly with the benefits you received too. But are these teeny exceptions a hard problem to deal with even in the highly unlikely event that they happen?

So what then should be taxed on that basis? Isn't it anything for which I receive a benefit from the taxing authority? While everything else remains tax free to preserve the justice in the distribution of the common stock of wealth produced within the bounds of that governed community.

Next we can decide on what are these things which benefit us and need taxing?

1) Location value
2) Wait... there is nothing else

Most people will be astonished to hear this and discount it out of hand immediately. Why not rise above these ones and discover something new and innovative?

It's claimed that the NHS delivers extraordinary benefit and should be paid for. Likewise for the highways which no one would say provide no economic benefit to a nation. And how about our academies of learning? Protection of the military, police and from fire. And public trnasport. This list goes on and on and on... Surely we must tax the people to pay for these things. "its just common sense right?"

Now then. Find a quiet moment and place to sit down. And take a deep breath.

All of these highly valued services are what determines the value of locations. And this value is measured in economic rent. The better the services in that location the higher the rent will climb all else being equal. And often the rise in location value measured in rent will climb higher than the costs of delivering these services. The demand for the use of those locations rises at a higher rate that the costs of the delivered service. This has been proven, in scientific measured fact, over and over. A classic exposition is the Jubilee Line Extension. Others examples are legion.

The immediate response to this staggering revelation is that there must be an error because none of the experts and professors ever mentioned it.

Well, I can only leave it to your own imagination to decide on why they do not ever discuss it. And remain in the hope that using your own perfectly adequate and skilled mind you will decided about it independently of external forces. And wherever it leads, you will proceed with courage.