Following the release of the Panama Papers, now feels like an excellent time to review my favourite book about tax, money and the common good: The Courageous State: Rethinking Economics, Society and The Role of Government by Richard Murphy.

I bought this book after hearing Richard Murphy giving an Ebor Lecture in York on the moral and practical implications of tax (transcript here). He is an award winning accountant, blogger, professor and founder of the Tax Research Network, and this book illustrates why he was voted the UK’s most influential accountant. In “The Courageous State”,  he argues thoughtfully why tax is essential to a thriving society.

In particular, he chastises weak governments who believe implicitly in the supremacy of the market and thereby create a cowardly state, which he defines as “a state that sees responsibility and then runs away from it”. This is perhaps most easily seen in major infrastructure spend, where courageous states would invest for a significant long term return, while cowardly ones kick big decisions into the long grass. We could have built Crossrail 20 years ago, for example – and used a land value tax to pay for it!

Several of his points were novel to me but made a great deal of sense, such as the impossibility of having an efficient healthcare or education system which is not publicly run. Simply put, competition means giving people choices, which means providing excess capacity where it is not needed and simultaneously diverting funds to people trying to make a profit rather than focusing spending on delivering an essential service. He also argues that we should not see taxes as an imposition but observe that, without a functioning state to provide security and the rule of law, it is impossible to run a business at all (think Somalia). Since none of us are islands, tax belongs to governments by right to make our common life possible. And when was it ever acceptable  for companies to just take all the benefits society provides (such as providing an educated and healthy workforce) and not pay for them?

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