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Taxation: Philosophical Perspectives
Martin O’Neill
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OUP CORRECTED PROOF – FINAL, 28/6/2018, SPi
Taxation
ENGAGING PHILOSOPHY
This series is a new forum for collective philosophical engagement with

controversial issues in contemporary society.
Disability in Practice
Edited by Adam Cureton and Thomas E. Hill, Jr.
Taxation
Philosophical Perspectives
Edited by Martin O’Neill and Shepley Orr
Bad Words
Philosophical Perspectives on Slurs
Edited by David Sosa
Taxation
Philosophical Perspectives
E DI TED BY
Martin O’Neill
and Shepley Orr
1
3
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
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It furthers the University’s objective of excellence in research, scholarship,
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First Edition published in 2018
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Advanced Praise
“Theories of distributive justice have enormous implications for tax systems. Yet the
topic of taxation itself has rarely been given systematic attention by philosophers.
This timely and important volume is the first edited collection on philosophical
approaches to taxation and sets a very high standard. It contains contributions from
leading interdisciplinary political philosophers, who provide a range of rigorously
argued perspectives both on general questions of the justification of taxation, and on
the desirability of specific taxes. Showing that it is far from an abstract or merely
technical issue, this essential volume makes a powerful case that taxation is a central
concern for distributive justice.”
—Jonathan Wolff, Blavatnik Professor of Public Policy,
University of Oxford
“Taxes are more than arithmetic; they inevitably raise questions of values. Yet, with
few exceptions, philosophers have left taxes to economists and politicians. This
excellent volume brings together a range of values, viewpoints and considerations
that bear on taxes in general and on specific cases. It should be widely read by
philosophers as well as by anyone interested in understanding what’s at stake in our
debates about taxes.”
—Debra Satz, Marta Sutton Weeks Professor of Ethics in
Society and Professor of Philosophy, Stanford University
“Myths, slogans, ideology—few topics are less understood than tax, and yet few areas
of policy are more important for realizing justice. In this book experts from several
disciplines interrogate taxation, from its philosophical foundations to how we should
change our laws today. Rich in ideas, this collection will be essential for everyone who
wants to understand what taxation really is and how it can be done right.”
—Leif Wenar, Chair of Philosophy and Law,
King’s College London
Contents
List of Figures, Table, and Box ix

Notes on Contributors xi
Introduction 1
Martin O’Neill and Shepley Orr
Part I. On the Tax System: Normative

and Conceptual Questions
1. What Political Philosophy Should Learn from Economics
about Taxation 17
Alan Hamlin
2. Welfarism, Libertarianism, and Fairness in the Economic Approach
to Taxation 37
Marc Fleurbaey
3. Striving for the Middle Ground: Taxation, Justice, and the Status
of Private Rights 60
Geoffrey Brennan
4. Taxing or Taking? Property Rhetoric and the Justice of Taxation 81
Laura Biron
5. Libertarianism and Taxation 98
Peter Vallentyne
6. Tax Policy and Fair Inequality 111
Alexander W. Cappelen and Bertil Tungodden
7. Beggar Your Neighbour (Or Why You Do Want to Pay Your Taxes) 124
Véronique Munoz-Dardé and M. G. F. Martin
Part II. Tax Policy and Forms of Taxation:

Philosophical Issues
8. The Case for a Progressive Benefits Tax 147
Barbara H. Fried
9. Moral Objections to Inheritance Tax 167
Stuart White
viii CONTENTS
10. The Politics of Land Value Taxation 185

Iain McLean
11. The State and Tax Competition: A Normative Perspective 203
Peter Dietsch
12. Global Taxation and Accounting Arrangements: Some Normatively
Desirable and Feasible Policy Recommendations 224
Gillian Brock and Rachel McMaster
Index of Names 245

Index 249
List of Figures, Table, and Box
Figures
3.1 Democratic equilibrium and maximin in tax rate determination 75
6.1 Unfairness and inequality over time 120
Table
11.1 Relation between the challenge presented by tax competition
and the normative response 218
Box
2.1 Social objectives and their income tax implications 49
Notes on Contributors
L AURA B IRON studied Philosophy at Queens’ College, Cambridge, and at Harvard on

a Kennedy Scholarship. She completed a PhD in Philosophy at St John’s College,
Cambridge, before taking up a Junior Research Fellowship at Queens’ College. She
has worked as a Greenwall Fellow in Bioethics and Health Policy at Johns Hopkins
University, an assistant Professor of Philosophy at the University of Virginia, and a
Lecturer in Philosophy at the University of Kent. Laura recently trained for ordained
ministry in the Church of England, and currently works as a priest in Oxford
Diocese.
G EOFFREY B RENNAN is Professor Emeritus in the Philosophy Department, Australian
National University and Visiting Research Professor at Duke University (in Political
Science) and UNC-Chapel Hill (in Philosophy). An economist by training and for
most of his academic life, he now self-identifies as a PPE scholar working at the
intersection of Economics and Social & Political Philosophy.
G ILLIAN B ROCK is Professor of Philosophy at the University of Auckland in New
Zealand. Her publications include Global Justice: A Cosmopolitan Account (Oxford
University Press, 2009); Debating Brain Drain: May Governments Restrict Emigra-
tion? (Oxford University Press, 2015, with Michael Blake); Cosmopolitanism versus
Non-Cosmopolitanism (Oxford University Press, 2013, edited); The Political Philoso-
phy of Cosmopolitanism (Cambridge University Press, 2005, edited with Harry Brig-
house); and Global Health and Global Health Ethics (Cambridge University Press,
2011, edited with Solomon Benatar).
A LEXANDER W. C APPELEN is Professor in Economics at the Department of Econom-
ics, NHH Norwegian School of Economics, and an associated researcher at the
Centre for Applied Research at NHH. He co-directs the research group The Choice
Lab, and is the Deputy Director of the Centre of Excellence FAIR (Centre for
Experimental Research on Fairness, Inequality, and Rationality). His research areas
are in behavioural economics, optimal taxation, experimental economics, distributive
justice, and business ethics.
P ETER D IETSCH is a full professor in the Department of Philosophy at the University
of Montreal. He works on issues of economic ethics, with a focus on the distribution
of income and wealth as well as on the evaluation of economic policies. His publica-
tions include Catching Capital: The Ethics of Tax Competition (Oxford University
Press, 2015) and Do Central Banks Serve the People? (co-authored with François
Claveau and Clément Fontan, Polity Press, 2018). Dietsch is a member of the College
of New Scholars of the Royal Society of Canada.
xii NOTES ON CONTRIBUTORS
M ARC F LEURBAEY is Robert E. Kuenne Professor in Economics and Humanistic

Studies, and Professor of Public Affairs at the University Center for Human Values
at Princeton University. He has been an economist at INSEE (Paris), a Professor of
Economics at the Universities of Cergy-Pontoise and Pau (France), and a research
director at the National Center for Scientific Research (CNRS) in Paris. He has also
been a Lachmann Fellow and a visiting professor at the London School of Economics.
He is the author of Fairness, Responsibility, and Welfare (2008), and co-author
of Beyond GDP (with Didier Blanchet, 2013), and A Theory of Fairness and Social
Welfare (with François Maniquet, 2011). He has been a coordinating lead author for
the Intergovernmental Panel on Climate Change (IPCC) and is one of the initiators of
the International Panel on Social Progress (IPSP). His research on normative and
public economics and theories of distributive justice has focused in particular on the
analysis of equality of opportunity, on fair allocation, and social choice theory, with
applications to income taxation, health policy, and climate mitigation.
B ARBARA H. F RIED is the William W. and Gertrude H. Saunders Professor of Law at
Stanford University. She has written extensively on questions of distributive justice in
the areas of tax policy, property theory, and political theory. She is the author of The
Progressive Assault on Laissez Faire: Robert Hale and the First Law and Economics
Movement (Harvard University Press). A collection of her essays on moral and
political theory is forthcoming from Oxford University Press.
ALAN HAMLIN is Emeritus Professor of Political Theory at the University of Manchester
and Visiting Professor at King’s College, London. He was previously Professor of
Economics and Dean of Law, Arts, and Social Sciences at the University of Southamp-
ton. He has written widely at the intersection of philosophy, politics, and economics,
with recent work on expressive political behaviour, constitutional political economy,
non-ideal theory, feasibility, and conservatism.
I AIN M C L EAN is a Senior Research Fellow of Nuffield College, Oxford, and directs its
Gwilym Gibbon Centre for public policy. He has been interested in property taxes since
his time as elected member and committee (vice-) chair of Tyne & Wear metropolitan
County Council in the 1970s. Other interests include land reform in Scotland and Wales,
and the Scottish, American, and French Enlightenments. He has been a member of local
tax policy working groups for the Scottish Parliament and the Welsh government. He
was Vice-President for Public Policy of the British Academy from 2012 to 2016.
R ACHEL M C M ASTER is a New Zealand-qualified solicitor currently practising com-
mercial litigation in London. She holds a Bachelor of Arts (Political Studies/
Economics) and a Bachelor of Laws from the University of Auckland, and a Master
of Laws from Harvard Law School. During her time at the University of Auckland,
she worked as a research assistant under the supervision of Professor Gillian Brock.
NOTES ON CONTRIBUTORS xiii
She has a particular interest in the application of global justice principles to public
policy in the fields of taxation and health.
M IKE M ARTIN is the Wilde Professor of Mental Philosophy at the University of
Oxford, and Mills Adjunct Professor of Philosophy at the University of California,
Berkeley. For many years, he taught at in the Department of Philosophy UCL. Much
of his work is focused in the philosophy of perception, and he has keen interest in the
work of David Hume, including his moral and political philosophy.
V ÉRONIQUE M UNOZ -D ARDÉ is Professor of Philosophy at UCL and also teaches at
the University of California, Berkeley. Her research is principally in practical reason-
ing, ethics, and political philosophy, as well as in eighteenth-century political
thought, particularly that of Rousseau and Hume.
M ARTIN O’N EILL is Senior Lecturer in Political Philosophy at the University of York.
He was previously Hallsworth Research Fellow in Political Economy at the Univer-
sity of Manchester and, before that, Research Fellow in Philosophy and Politics at
St John’s College, Cambridge. His work has appeared in journals such as Philosophy &
Public Affairs and the Journal of Political Philosophy, and he is co-editor (with Thad
Williamson) of Property-Owning Democracy: Rawls and Beyond (Wiley-Blackwell,
2012). He is a Commissioning Editor of Renewal: the Journal of Social Democracy.
He is interested in social justice in both theory and practice, including various issues
at the intersection of political philosophy, political economy, and public policy.
S HEPLEY O RR is Lecturer in the Department of Civil, Environmental & Geomatic

Engineering in the UCL Faculty of Engineering Sciences, and an affiliate member of
the UCL Centre for Philosophy, Justice, and Health. He previously worked in the
Department of Economics at the University of East Anglia. His work has appeared in
journals spanning a number of disciplines, including Politics, Philosophy and Eco-
nomics (PPE), Kyklos, Transportation Research, and the Journal of Risk and Uncer-
tainty. He frequently consults for a range of public and private bodies on issues
relating to decision-making, benefit valuation, and policy formation.
B ERTIL T UNGODDEN is Professor in Economics at the Department of Economics,

NHH Norwegian School of Economics, and an associated researcher at the Centre
for Applied Research at NHH. He is the Scientific Director of the Centre of Excel-
lence FAIR (Centre for Experimental Research on Fairness, Inequality, and Ration-
ality) and co-directs the research group The Choice Lab. His research areas are in
behavioral economics, normative economics, political philosophy, and development
economics. He has published extensively in international journals in economics,
philosophy, general sciences, and management science, and he is currently on the
editorial boards of several international journals.
xiv NOTES ON CONTRIBUTORS
P ETER V ALLENTYNE is Florence G. Kline Professor of Philosophy at the University of

Missouri, USA. He writes on issues of liberty and equality in the theory of justice (and
left-libertarianism in particular) and, more recently on enforcement rights (rights to
protect primary rights). He is an associate editor of the Journal of the American
Philosophical Association and of Social Choice and Welfare.
S TUART W HITE is Tutorial Fellow in Politics at Jesus College, Oxford. He is the
author of The Civic Minimum (2003) and Equality (2006), and co-author, with Rajiv
Prabhakar and Karen Rowlingson, of How to Defend Inheritance Tax (2008). He is
currently writing a book that is provisionally entitled Democracy Over Wealth?
Liberal Republican Political Economy.
Introduction
Martin O’Neill and Shepley Orr
The tax system is central to the operation of states and to the ways in which states
interact with individual citizens. Taxes are used by states to fund the provision of
public goods and public services, to engage in direct or indirect forms of redistribu-
tion, and to mould the behaviour of individual citizens through incentivizing certain
activities (such as charitable giving, or investment in new technology) through tax
breaks, or to dissuade people from engaging in other activities by means of Pigouvian
taxes, including ‘sin taxes’ (such as those associated with the consumption of alcohol
or tobacco).¹ Given the absolute centrality of the tax system to some of the main
functions of the state, the analysis of conceptual and normative issues relating to
taxation should be at the heart of political philosophy. The shape of the tax system is
an unavoidably and irreducibly normative matter, and one which implicates a
number of core concerns of social justice.² When we think about issues of social
justice in practice, we cannot avoid thinking at the same time about tax.
Given that taxation is one of the most significant mechanisms for interaction
between states and individual citizens, it is perhaps surprising that there has not been
as much work on taxation within political philosophy as one might have expected.
This is not, of course, to say that political philosophy has been silent about tax. But
as the chapters in this volume show, there are a number of pressing and significant
philosophical issues relating to the tax system, and these issues often connect in
fascinating ways with foundational questions regarding property rights, democracy,
public justification, state neutrality, stability, political psychology, and a range of
other issues. Many of these deep and fascinating philosophical questions about tax
have not always received as much sustained attention as they clearly merit. Our hope
is that this book will advance the debate along a number of these philosophical fronts,
and be a welcome spur to further work.
¹ For a general introduction to the economics of the tax system, see Stiglitz 2000; Hindriks and Myles
2006; Barr 2012; Atkinson and Stiglitz 2015. On Pigouvian taxes, see Pigou 1932; Baumol 1972.
² For a survey article on justice and taxation, see Halliday 2013.
 MARTIN O ’ NEILL AND SHEPLEY ORR
The book’s aim of advancing the debate about taxation in political philosophy has
both general and more specific aspects, involving both overarching issues regarding
the tax system as a whole (discussed primarily in Part I of the book), and more
specific issues relating to particular forms of tax policy (which are the focus of
Part II). Thinking clearly about tax is not an easy task, as much that is of central
importance is missed if one proceeds at too great a level of abstraction, and issues of
conceptual and normative importance often only come sharply into focus when
viewed against real-world questions of implementation and feasibility. Serious philo-
sophical work on the tax system requires an interdisciplinary approach, and this
volume includes contributions from a number of scholars whose expertise spans
neighbouring disciplines, including political science, economics, public policy, and
law. We are fortunate indeed, as editors, to be able to present such a range of chapters
from scholars with such an impressive range of scholarly expertise.
Before briefly introducing each chapter, we will begin first by sketching something
of the philosophical background against which the contributions made by these
chapters can be viewed.
One useful set of starting points for philosophical discussions of taxation are the
polar contrasts provided by Robert Nozick and John Rawls, whose diametrically
opposed views of the justice and legitimacy of the tax system had deep roots in their
similarly contrasting views on the nature of property rights. Writing in Anarchy,
State, and Utopia, Nozick famously (or perhaps infamously) declared that “Taxation
of earnings from labor is on a par with forced labor” (Nozick 1974: 169), arguing that
mandatory fiscal contributions should extend only to the support of the minimal
state needed for the protection and enforcement of property rights, and that redis-
tributive transfers to benefit the needy or disadvantaged should be achieved instead
by philanthropic beneficence rather than by compulsory enforcement. Such views
flowed from Nozick’s underlying view that property rights, including rights of self-
ownership, were fundamentally pre-political, creating constraints on what a state
could legitimately do to interfere with the pre-existing property rights of the indi-
viduals on its territory.
This stark and austere libertarian picture of the status of taxation continues to
exert a strong influence over contemporary debates, both positively and negatively, as
both inspiration and as a foil for opposing views. This engagement with libertarian
ideas is accordingly very much present in this volume. Among the book’s chapters we
have, from Peter Vallentyne in Chapter 5, a detailed examination of how we might
think about tax given a libertarian understanding of pre-political property rights.
Contrastingly, from Véronique Munoz-Dardé and Mike Martin in Chapter 7, we
have an argument prosecuted directly against Nozick’s views regarding the super-
iority of charitable giving over compelled transfers via taxation; and in Chapter 8 we
have a further critical engagement with the libertarian tradition of thinking about
taxation, as Barbara Fried presents a powerful critique of the idea, sometimes advanced
from the political right, that if we think of the ideal tax system as in some ways a
INTRODUCTION 
market-mimicking mechanism designed to charge people for benefits received, we

would thereby be able to build a principled case against progressive taxation.
Providing almost the starkest imaginable contrast to the Nozick’s libertarian
approach to taxation there is the view of tax associated with John Rawls (Rawls
1999, 2001). For Rawls, property rights are not pre-political constraints on the
operation of political and economic institutions, but rather they are themselves
creations of the “basic structure” of society, that is of “the main political and social
institutions and the way they hang together as a system of cooperation” (Rawls 2001:
8–9). On Rawls’s view the rules of the tax system, like any other set of public rules
governing the distribution of material benefits and burdens within society, are also
simply aspects of that basic structure. A tax system is just, on Rawls’s view, when it
operates as part of an overall system of rules and institutions, including the full set of
rules and institutions governing property, that taken together satisfy the principles of
justice. The assessment of justice is, on a Rawlsian view, socially holistic, and the tax
system is just one part of that whole. Thus, whereas for Nozick questions of the
justice or legitimacy of taxation are questions about whether or how the state can
interfere with certain pre-political property entitlements, for Rawls questions of tax
justice are just one aspect of a broader set of questions about social justice.
Rawls himself does not give a systematic account of the tax system that would
be required within a just society, being fully aware of how difficult the task would be,
given the holism of justice, and the fact that, in a just basic structure, everything
depends on everything else. But he does make some “illustrative and highly tentative”
remarks (Rawls 2001: 136) regarding the taxes that would be needed in a basic
structure. Following James Meade (1964), Rawls endorses—as potentially the most
important redistributive tool available to government—a highly progressive,
recipient-oriented form of inheritance and capital transfer tax.³ Such aggressive
forms of capital taxation would, Rawls thought, be necessary in order to break up
the intergenerational transfers of relative advantage that would otherwise make it
impossible to realize the fair value of the political liberties or fair equality of
opportunity. Hence, Rawls’s sketch for the institutions of a just society which,
following Meade, he described as a “property-owning democracy”, had this super-
charged version of inheritance (and capital transfer) taxation as one of its key
elements (see also O’Neill 2012; O’Neill and Williamson 2012; O’Neill 2015). (In
Chapter 9, Stuart White defends the kind of inheritance tax endorsed by Meade and
Rawls against a number of possible lines of normative objection.)
The broadly Rawlsian approach to thinking about tax receives its fullest develop-
ment in what is perhaps the most important treatment of tax within political
³ For more on Rawls’s remarks regarding the tax system that would be needed in a just society, including
critical discussion of his (tentative) endorsement of a proportional expenditure tax, see O’Neill and
Williamson 2015.
 MARTIN O ’ NEILL AND SHEPLEY ORR
philosophy during the past few decades, Liam Murphy and Thomas Nagel’s book,
The Myth of Ownership: Taxes and Justice (Murphy and Nagel 2002).⁴ Murphy and
Nagel’s book looms large in the background to the discussions pursued in the present
volume, and it is therefore worthwhile to pause to present the central elements of
their view. Murphy and Nagel begin from the core Rawlsian commitments to the
primacy of the basic structure and the holism of justice. The legal rules of the tax
system, on this view, are just one aspect of the rules of property, and the question of
the justice of the rules of property are just one aspect of the holistic question of the
justice of the basic structure.
As Murphy and Nagel ingeniously show, this basic conceptual point carries with it
a number of striking particular implications for how we think about the normative
assessment of tax policy. Most importantly, on this broadly Rawlsian view, the idea of
“pre-tax income” simply has no normative standing. It is not that we have some
primitive entitlement to our market holdings, with which the state then interferes;
rather, our property entitlements are simply what results from the operation of the
rules of property taken together, of which the tax rules are simply one part. Pre-tax
income is just a conventional accounting identity, denoting a useful but imaginary
quantity of no normative significance. What follows from this is that much of the
day-to-day vocabulary used to talk about the justice of the tax system, much of it
grounded in the public finance tradition associated with the work of Richard
Musgrave and others (Musgrave 1959), but which has since then become the
quotidian common sense of tax policy discussions, is confused and incoherent.
One often hears about the fair distribution of “the tax burden”, but the very idea of
the tax burden involves making a comparison between the appropriately real figure
of post-tax income and the merely phantasmagorical figure that is people’s pre-tax
income. To even talk of the tax burden is to fall into the conceptual errors involved in
what Murphy and Nagel call “everyday libertarianism”, which posits an unexamined
and faulty assumption that one has a kind of primitive ownership claim over one’s
pre-tax market income. But once the idea of the tax burden has been thrown into the
conceptual dustbin, so too do the commonly discussed measures of “vertical equity”
(i.e. relative tax burdens between individuals at different points in the distribution of
pre-tax income) and “horizontal equity” (i.e. relative tax burdens between those at
the same point on the distribution of pre-tax income), that are the mainstays of much
discussion of fairness and equity in tax policy (see e.g. Slemrod and Bakija, 2017).
What matters, on the Rawlsian view advanced by Murphy and Nagel, for the
assessment of the justice of the tax system is not then vertical equity or horizontal
equity or any other idea connected to the distribution of the tax burden, or any idea
that gives any normative standing whatsoever to individuals’ notional pre-tax
⁴ On Murphy and Nagel’s arguments in The Myth of Ownership, see Gosseries 2005; Wenar 2005;
Thomas and O’Neill 2015.
INTRODUCTION 
income, but simply the way in which the tax system meshes with the other parts of
the basic structure of society to create just overall outcomes.
As readers will see, Murphy and Nagel’s powerful and provocative arguments are
an important presence in the first part of the book. The chapters by Alan Hamlin,
Marc Fleurbaey, Geoffrey Brennan, and Laura Biron (Chapters 1–4) each in their
own ways, more or less directly, engage with the main arguments of Murphy and
Nagel’s book. One can see each of the four as attempting, in interestingly distinctive
ways, to lay out a position that lies in between the poles presented by the libertarian
and Rawlsian approaches to taxation, looking to find what Brennan describes as a
“middle ground” between those starker approaches. Where Nozick’s libertarian view
turns on giving a near-absolute normative authority to individuals’ pre-political
market entitlements, and the view shared by Rawls, Murphy, and Nagel dismisses
such notional entitlements outright, these four authors, as well as Alexander Cappelen
and Bertil Tungodden in Chapter 6, explore some of the possibilities of the large
territory in between.
We turn now to a more detailed sequential introduction to each of the book’s
chapters.
Part I. On the Tax System: Normative

The first part of the book contains seven chapters, and covers a wide variety of
philosophical issues relating to the nature of the tax system, and its relation to
questions regarding the theory of property, distributive justice, and individual rights.
In doing so, these chapters also examine the relationship between the analysis of
taxation in political philosophy and the way in which we think about taxes in
neighbouring disciplines including political science and economics.
In Chapter 1, Alan Hamlin provides a general answer to the question of what
political philosophy should learn from economics about taxation. There are, broadly
speaking, three distinct approaches to the economic analysis of taxation, which can
be considered as falling under the headings of (a) the mainstream literature on
optimal taxation, originating in the work of F. P. Ramsey (Ramsey 1927), the
Cambridge philosopher and logician who also managed to be a brilliant economist
in his spare time, and later developed by economists including Mirrlees, Diamond,
and Atkinson and Stiglitz (Diamond and Mirrlees 1971a, 1971b; Mirrlees 1971;
Atkinson and Stiglitz 1976); (b) a political economy tradition that builds from a
Downsian model of democracy (Downs 1957), developed in the work of Foley,
Romer, Roberts, and others (Foley 1967; Romer 1975; Roberts 1977) which attempts
to make sense of the role of political factors in the determination of the tax structure;
and (c) the tax constitution approach associated with the work of Geoffrey Brennan and
James Buchanan and their collaborators (e.g. in Buchanan and Wagner 1977; Brennan
 MARTIN O ’ NEILL AND SHEPLEY ORR
and Buchanan 1980, 1985; Buchanan 1987, 2004; Brennan and Hamlin 1995) which
concentrates on the idea of “the power to tax” and of the possibility of constitutional
controls on the discretionary power of governing elites.
Hamlin argues that, while there may be a place for a normative theory of taxation
within ideal theory, we should see questions of tax policy as presenting an essentially
non-ideal set of problems, where issues of limited information and the sometimes
less-than-fully compliant motivations of agents need to be given serious attention.
Therefore the “first-best” answers to questions of optimal tax policy design are largely
irrelevant when we think about the real-world development of plausible and norma-
tively attractive tax policies. Hamlin’s suggestion is that, when thinking about the
design of real-world tax policies that meet standards for public justifiability, political
philosophers should draw carefully on the insights of each of these three traditions
within the economic analysis of tax systems. On Hamlin’s view, each of these three
economic traditions addresses one part of the overall normative problem of design-
ing a robust system of taxation. As Hamlin concludes, a more mature philosophical
debate on taxation will require a realization of the non-ideal context in which tax
policy operates, seeing that we need to move beyond the first-best proposals of
excessively abstract economic models, and thereby taking seriously the range of
economic and political trade-offs that need to be considered carefully in designing
real-world tax policies.
In Chapter 2, Marc Fleurbaey defends a version of the economic approach to optimal
taxation associated with the work of James Mirrlees (see esp. Mirrlees 1971). The
Mirrlees approach has been developed in recent years, in the work of Fleurbaey himself,
together with his collaborator François Maniquet, as well as by Thomas Piketty and his
collaborators Emmanuel Saez and Stefanie Stantcheva, in a direction that proposes the
incorporation of ideas of fairness within the Mirrlees framework (see Fleurbaey 2008;
Fleurbaey and Maniquet 2011; Piketty and Saez 2012; Saez and Stantcheva 2016). As
both Fleurbaey and Hamlin point out, the work of Murphy and Nagel in some respects
takes aim not at the more recent, post-Mirrlees orthodox economic approach to the
analysis of taxation, but instead presents arguments against the earlier “public finance”
orthodoxy associated with Musgrave and others. Fleurbaey argues that, while Murphy
and Nagel give persuasive arguments against the ideas of horizontal and vertical
equity used in that earlier public finance approach to the assessment of tax regimes,
they underestimate the degree to which the post-Mirrlees economic approach actually
manages to embody an approach to the tax system that they would accept—being
holistic in terms of its assessment of outcomes, and being anti-libertarian in terms of
its denial of any special normative significance to pre-tax market incomes.
Intriguingly, then, Fleurbaey argues that his own development of the Mirrlees
framework to give more of a role to considerations of fairness puts him on one side of
an important argument against both Murphy and Nagel and Mirrlees; for, on the
view defended by Fleurbaey, we should in fact give some normative authority to pre-
tax incomes. As he puts it, the view he defends “retains an element of libertarianism”
INTRODUCTION 
(albeit only a small element). Whereas the orthodox economic approach since
Mirrlees has embodied a form of welfarist consequentialism, the “fair allocation”
development of that tradition in the work of Fleurbaey and others has been influ-
enced by luck egalitarian approaches to distributive justice, which give a greater
normative weight to choice and responsibility within market outcomes. Thus, deter-
mination of the most appropriate economic approach to the assessment of tax
systems is deeply entwined with philosophical questions about the normative sig-
nificance of markets and the normative standing of market outcomes. By tracing
these close connections between philosophical accounts of justice and economic
frameworks for the analysis of tax policy, Fleurbaey gives both a defence of his
own particular “fairness” approach, while also showing the general relationship
between philosophical and economic approaches to tax.
While both Hamlin and Fleurbaey touch upon areas of disagreement with Murphy
and Nagel’s The Myth of Ownership, in Chapters 3 and 4 we have two more direct
confrontations with the central ideas that Murphy and Nagel develop. One of the
outstanding features of The Myth of Ownership is the way that it moves between
relatively technical questions of tax design to fundamental questions regarding the
nature and justification of property rights, the significance of market outcomes, and
the role of the state in defining the limits of individual entitlements. These founda-
tional issues, as raised by Murphy and Nagel, are addressed directly and illuminat-
ingly in their chapters by Geoffrey Brennan and Laura Biron.
In Chapter 3, Geoffrey Brennan makes use of an engagement with Murphy and
Nagel to discuss foundational questions of what any “quasi-Rawlsian” (in Brennan’s
terms) conception of justice would require of the tax system. Among Brennan’s
conclusions is the claim that Murphy and Nagel go too far in outlining their thesis
of the “myth of ownership”, whereby all property rights are seen as conventional
entailments of a particular set of property rules, where these rules are viewed as
including the tax code itself. Instead, Brennan looks to distinguish between two levels
of rules within the economic system—the “constitutional” rules determined by the basic
economic and political institutions of a society, and then the “in period” or quotidian
rules that might include the more specific details of the tax system. On Brennan’s view,
Murphy and Nagel’s account of the relationship between property rights and the tax
system fails to mark the distinction between these two levels of analysis. Here Brennan,
a leading proponent of the tradition of constitutional political economy, who was a
co-author, along with James Buchanan, of the influential 1980 book The Power to Tax
(Brennan and Buchanan 1980), is pursuing one of the central themes of the “tax
constitution” approach discussed in Chapter 1 by Alan Hamlin.
From this foundational disagreement with Murphy and Nagel, Brennan then
draws a more particular conclusion at the level of tax policy design. Brennan argues
that a principle of ‘anonymity’—i.e. a claim regarding the normative irrelevance, for
purposes of justice, of permutations of individuals’ positions—should lead one to
support a principle of horizontal equity, dismissed by Murphy and Nagel, as being a
 MARTIN O ’ NEILL AND SHEPLEY ORR
central requirement of any justifiable tax system. Whilst this is very far from a
justification of a libertarian approach to taxation, it does mean that Brennan stands
alongside Fleurbaey in questioning Murphy and Nagel’s view on the normative
irrelevance of pre-tax distributions.
In Chapter 4, Laura Biron further pursues deep-seated questions regarding the
relationship between the way in which we think about the tax system and the way in
which we think about the nature of property rights themselves. Biron points out that,
although rhetorical appeals to property rights are highly prevalent in popular debates
about taxation, there is a surprising lack of detailed work on taxation within the
general jurisprudence of property. Her contention is that only by taking seriously
philosophical and jurisprudential work on property can we think systematically and
accurately about normative issues in the tax system. Biron is therefore sceptical with
regard to the way that the idea of property seems almost to “drop out” of Murphy and
Nagel’s picture of the tax system, with property rights seen as nothing more than the
conclusive consequences of systems of independently justified institutional rules. As
with Brennan, Biron does not agree that Murphy and Nagel’s “myth of ownership”
really is such a myth after all. Biron’s overall salutary aim is to urge theorists of
taxation to engage with conceptual questions about property rights in a more detailed
way, while also encouraging theorists of property to bring their work to bear more
directly on questions relating to taxation.
In Chapter 5, following the engagement with themes from libertarian thought in
the chapters from Fleurbaey and Brennan, Peter Vallentyne gives a general account
of how libertarians of varying stripes might think about the tax system. While, thanks
to Nozick, libertarian slogans associating taxation with forced labour are well-known,
Vallentyne shows that the interest and diversity of libertarian thinking about the tax
system is much greater than one might initially have imagined. Although some
versions of libertarianism preclude just taxation of any (or almost any) kind, Val-
lentyne points out that a number of libertarian viewpoints can be consistent with
taxes imposed on rights-infringers in order to support the costs of a system of rights-
enforcement. Moreover, those who share the left libertarian position that Vallentyne
himself defends can support a tax system that taxes those with an excessive share of
the value of ownership rights over natural resources.
Chapter 6 returns to some of the themes that were discussed in Chapter 2 by Marc
Fleurbaey, regarding the relationship between liberal egalitarian approaches to tax-
ation, informed by recent work in political philosophy, and the kind of welfarist
approaches to taxation that have been dominant in economics at least since the work
of James Mirrlees. In this chapter, Alexander Cappelen and Bertil Tungodden side
with Fleurbaey in arguing for the superiority of the “fairness-based” liberal egalitar-
ian approach over the post-Mirrlees welfarist orthodoxy in economic approaches to
taxation. Cappelen and Tungodden argue that the liberal egalitarian approach
manages, by focusing on a core idea of fairness, to avoid besetting problems of the
welfarist approach regarding the possible slavery of the talented and the exploitation
INTRODUCTION 
of the hard-working. Picking up a theme in Alan Hamlin’s discussion of the non-

ideality of tax policy (in Chapter 1), Cappelen and Tungodden go on to explore
informational problems as they affect the kind of liberal egalitarian approach to tax
policy that they endorse, whilst nevertheless concluding that this liberal egalitarian
“fairness” approach can still be used in the normative evaluation of tax policies.
Cappelen and Tungodden show how a progressive income tax system can have a
kind of dual effect regarding what they call “fair inequalities”—i.e. unequal outcomes
that depend on differences in factors for which individuals ought, by the lights of the
account of fairness the authors endorse, actually to be held responsible. An equalizing
tax system can, on this account of fairness, have one kind of “fair” effect whereby it
reduces inequalities due to factors for which individuals should not be held respon-
sible, while having a parallel “unfair” effect whereby it reduces inequalities that are
due to factors for which individuals should, in fact, be held responsible. Cappelen and
Tungodden show how, using illustrative Norwegian data, one might go about
investigating which effect predominates for any particular tax policy.
In Chapter 7, Véronique Munoz-Dardé and Mike Martin offer an ingenious line of
argument against broadly libertarian approaches to taxation, and in favour of state
compulsion via the tax system as opposed to charitable provision for the needy.
Munoz-Dardé and Martin examine the comparison between two cases: one a highly
redistributive state in which the needs of the disadvantaged are met by mandatory
redistribution, and the other a minimal state in which the level of charitable giving
rises to a level at which the relatively disadvantaged are no worse-off in financial
terms than they would be under the system of mandatory redistribution. Munoz-
Dardé and Martin argue that, even when compared to this imagined world of
bounteous charitable giving, there are general reasons for citizens to prefer to live
in societies in which their contribution to those in need is compelled via the tax
system. But whereas we might be familiar with the justification for compulsion over
charity based on the interests of the beneficiaries, Munoz-Dardé and Martin argue
that there are weighty reasons to favour compulsory taxation from the perspective of
the donors or taxpayers themselves.
In order to make their case, Munoz-Dardé and Martin explore the structural
parallels between being induced to make a donation to a beggar and being induced
to make a donation to a charitable organization. Both involve, in their view, a kind of
emotional manipulation that can be seen as demeaning and emotionally costly for
both parties to the transaction. (And interestingly these social and emotional costs
are greater in comparatively egalitarian societies, where no pre-existing social hier-
archy can structure the relation between donor and beneficiary.) On their account,
begging is a socially costly activity that demeans both beggar and donor, and
charitable organizations set up to meet individuals’ fundamental needs are, in effect,
a form of vicarious or deferred begging. The “fetishizing of choice” characteristic of
libertarian approaches to public provision creates a set of intolerable social costs, not
only on the needy but also on the relatively advantaged. By contrast, public provision
 MARTIN O ’ NEILL AND SHEPLEY ORR
through compulsory taxation frees donors from the need to participate in demeaning
social interactions that they have strong reason to avoid.
Part II. Tax Policy and Forms of Taxation:

Philosophical Issues
The second part of the book, comprising five chapters, moves on from general issues
regarding the tax system to investigate some more specific questions regarding
different kinds of taxes, and specific issues regarding the operation of the tax system.
These chapters address in particular philosophical issues relating to benefits taxation,
inheritance tax, land tax, and the phenomenon of international tax competition.
In Chapter 8, Barbara Fried extends the book’s engagement with the libertarian
tradition of thinking about taxation by examining the idea of a “benefits tax”, that is,
a form of taxation that looks to set rates of taxation in a way designed to mirror
market outcomes, by taxing individuals for their consumption of public goods at a
level that as closely as possible parallels the market prices of such goods. As there is
no actually existing market for many such goods, such a benefits tax would look to
tax individuals in a way that responded to the “shadow” market price for the goods
consumed. An assumption on the political right has often been that the rate of
consumption of public goods declines with income, and that therefore such a tax
would be regressive (i.e. with the rich paying a benefits tax at a lower marginal rate
than would those in the middle or at the bottom of the income distribution).
Following on from a magisterial discussion of the significance and impact of Charles
Tiebout’s work on jurisdictional sorting (Tiebout 1956; Oates 1969), its impact on the
development of the literature on public finance, and the distributional dimensions of
“Tieboutian sorting”, Fried shows that this influential assumption regarding the
regressive character of a benefits tax is not on firm ground. The shadow market
prices of various public goods would depend on a number of conceptually and
normatively contestable assumptions about the nature and limits of what counts as
a public good, and regarding the structure of the imagined shadow market that we
would need in order to yield determinate prices. Hence, argues Fried, one can mount
a kind of internal critique of the libertarian case for a “benefits tax” and, by putting
pressure on these philosophical issues regarding the definition and scope of public
goods and the structure of virtual shadow markets, one can make the case that
endorsement of a regime of benefits tax could lead one not to a minimalist, regressive
tax system, but to a scheme of strongly progressive taxation.
In Chapter 9, Stuart White begins from Thomas Piketty’s recent work, which
argues that we face evolving dynamics within capitalist societies that will drive up
levels of income and wealth inequality, and deliver us to a social future of a rentier
society, in which the share of income from inherited wealth rises significantly, and in
which individual merit is swamped by the sheer fortune of inheritance and family
background (Piketty 2014; see also O’Neill 2017). Alongside both James Meade
INTRODUCTION 
(1964) and John Rawls (1999, 2001), White argues that one important form of public
policy that can act to undercut the dynamics that Piketty describes is a high level of
inheritance taxation. White’s primary aim is to show that the case for aggressive
levels of inheritance taxation is robust, and can withstand four separate lines of
“moral objection” to such taxes. He therefore sets himself the task of rebutting, in
sequence, four lines of argument against inheritance tax (some of which are associ-
ated with the work of Edward McCaffery (1994)), which fall under the headings of:
(a) the double tax objection; (b) the equity objection; (c) the virtue objection; and
(d) what he calls “the wrong problem objection”. White concludes that the strong
prima facie case in favour of high levels of inheritance taxation comfortably survives
its encounter with the strongest available moral counter-arguments, and that there-
fore those worried about the emergence of a rentier society should strongly endorse
an aggressive inheritance taxation regime of the kind favoured by Meade and Rawls.
Following on from Stuart White’s discussion of one kind of progressive capital
taxation, Iain McLean in Chapter 10 considers another approach as he examines the
case for land value taxation. As McLean shows, such proposals have a distinguished
pedigree, descending from Adam Smith and Thomas Paine via David Ricardo and
Henry George. Moreover, land value taxation meets some of the key desiderata of a
system of taxation, being a reliable way to raise considerable revenue with minimal
economic distortion. As Peter Vallentyne discussed in Chapter 5, it is also the case
that land value taxation is one form of tax that at least some libertarians (in particular
those such as Henry George and Vallentyne himself who would count as left-
libertarians) can endorse without doing violence to their core normative commit-
ments. “Descending from Olympia”, as he nicely puts it, McLean also considers,
alongside the philosophical case for land value taxation, the question of the political
palatability of such tax policies, and makes a number of suggestions for what a
political programme might look like that could bring land value taxation into being.
McLean also shows how, for those who might remain recalcitrantly opposed to the
attractions of inheritance taxation, perhaps even after reading Stuart White’s fore-
going chapter, and who might still cleave to the moral objections that White has
dismissed, land value taxation could provide an alternative route for governments to
tax capital without encountering the extraordinary levels of resistance that inherit-
ance tax arouses in so many jurisdictions.
In Chapters 11 and 12 we move on from issues relating to domestic systems of
taxation to consider a number of concerns relating to the international context in which
tax systems operate. A greater awareness has developed in recent years of the signifi-
cance of tax competition and tax arbitrage as barriers to the achievement of social justice
at either the national or international level, and issues of international taxation and
international accounting arrangements have been further pushed to the fore in light of
discussion of Thomas Piketty’s proposals for an international wealth tax (Piketty 2014).
While fiscal transfers are generally a matter for national governments rather than
transnational bodies, no normative discussion of taxation would be complete that did
not consider the international context within which tax policies operate.
 MARTIN O ’ NEILL AND SHEPLEY ORR
In Chapter 11, Peter Dietsch examines the way in which international tax competi-
tion can generate something akin to a Prisoner’s Dilemma for individual states: fiscal
policy can be used as a competitive tool to attract mobile capital from abroad, seemingly
to the advantage of individual states, but the collective consequence of tax competition
between competing states is to undermine the capacity of those states to make autono-
mous fiscal choices, thereby reducing states’ capacities to fund public services or to
reduce domestic inequality. Dietsch argues that a solution to this problem should start
from an account of the legitimacy of the state as the primary locus of fiscal authority, and
then should show how tax competition undermines the principal objectives assigned to
states under this understanding of their fiscal role. In finding an adequate response to
the problem of tax competition, Dietsch argues that redistributive obligations between
states can be generated as a form of compensation for the effects of tax competition.
In Chapter 12, Gillian Brock and Rachel McMaster consider the ways in which
forms of global tax avoidance connected to tax havens and forms of transfer pricing
contribute to global injustice. Tax havens and transfer pricing schemes syphon
revenues out of developing countries, denuding states of fiscal capacity and facilitat-
ing forms of political corruption. Brock and McMaster argue that, in order to deal
with problems of international tax avoidance, and to reduce the global injustices that
come in their wake, there is a pressing need to reconsider global accounting arrange-
ments and to develop new methods of targeted global taxation. They consider the
case in favour of implementing a number of carefully crafted global taxes, including
air ticket taxes and currency transaction taxes, arguing that the implementation of
new taxes of these kinds is both normatively desirable and practically feasible.
. . . . . .
In his review of Murphy and Nagel’s The Myth of Ownership, Leif Wenar described
tax as “fundamental to justice, yet slighted by philosophers”, bemoaning the fact that
“the philosophical literature shows scant grasp of, or even awareness of, the basic
issues of tax policy” (Wenar 2005: 285). Wenar’s charge remains true even now, but
we hope nevertheless that it will not remain true for much longer. The individual
chapters in this book encompass a broad range of philosophical perspectives, and
cover a rich set of issues. Taken together, they show just how serious work on the
political philosophy of tax can be done, and how insights from neighbouring
disciplines can be integrated into philosophical discussions of taxation. There is
much in this volume, we hope, that will generate further discussion and debate.
Our central aim is that taxation should take its place as a core concern of political
philosophy, and that this volume will play its role in making that happen.⁵
⁵ For their help and support along the way in the production of this volume, we are grateful to Judith
Freeman, Axel Gosseries, Gerald Lang, Mary Leng, Vijaya Manimaran, Matt Matravers, Brian North, April
Peake, Albert Stewart, and especially to Peter Momtchiloff and Jonathan Wolff. Most of all, we thank the
authors of these essays for their wonderfully stimulating work, and for their patience and helpfulness during the
process that brought this book into being.
INTRODUCTION 
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PART I
On the Tax System: Normative
1
What Political Philosophy
Should Learn from Economics
about Taxation
Alan Hamlin
1.1 Introduction
The aim of this chapter is to outline three broadly economic approaches to the
analysis of taxation and discuss what, if anything, each has to offer to the more
general normative political philosophy of taxation. The three approaches to be
considered may be characterized as the mainstream Optimal Tax (OT) literature,
the Political Economy (PE) literature, and the Tax Constitution (TC) literature.
While all are economic in their basic approach, these three literatures differ from
each other in many ways, and among the questions I will address is whether they are
best viewed as complements or substitutes and how they might be combined in order
to contribute to any more general and more philosophical discussion of taxation.
The motivation for this chapter derives from the observation (or assertion) that
normative political philosophy lacks any widely shared, systematic, or detailed
account of taxation, or even any general approach to taxation, while often relying
on very broad claims about progressivity, redistribution, or other aspects of taxation.
Taxation is often regarded as a ‘black box’ technology that can be called upon to put
into effect whatever distribution of economic benefits and burdens that is required
by the normative theory under discussion, without the need to consider the more
detailed internal properties of the black box itself. At the same time, there is a
tradition of resisting the ‘economic’ analysis of taxation at a variety of levels, as
exemplified in Murphy and Nagel’s (2002) discussion. The tactic in this chapter will
be to start from a more detailed account of the range of contemporary economic
approaches and attempt to show their value to normative political philosophy.
Tax theory and tax policy are complex, multidimensional issues. We might focus
on the overall progressivity of the tax system and its impact on the distribution
and redistribution of income, wealth, resources, or some more general indicator of
 ALAN HAMLIN
well-being; we might focus on the pattern of taxes across sectors and/or activities so
as to consider impacts on patterns of production or economic activity; we might
focus on the balance of indirect vs. direct taxation so as to address issues of personal
responsibility and the visibility of taxation; we might focus on the relationship between
taxation and levels and patterns of public spending to address issues of representation
and the hypothecation of taxation; we might focus on the role of corporate taxes, in order
to address issues concerning the role of non-natural agents in public life; we might focus
on the taxation of capital and savings, in order to address issues concerning the inter-
temporal aspects of economic life; we might focus on international taxation, tax havens,
and tax competition to focus on issues of global justice; and so on.¹
Clearly, we cannot hope to consider all of these matters here. In fact, we will refer
explicitly only to issues concerning progressivity and distribution, and the balance
between direct and indirect taxes. Rather than attend to the range of issues raised
within the analysis of taxation, we focus on the basic approach to the analysis of
taxation that might carry implications for all of the more particular issues listed
above. The discussion presented here provides a basis for the more detailed explor-
ation of the variety of issues within tax theory, since the general lessons drawn from
the discussion here are relatively robust across particular settings.
While there may be a place for taxation within ideal theory, tax policy may be
argued to be an essentially non-ideal issue, for several inter-connecting reasons
concerning the motivation of agents and the availability of information. In the
political philosophy literature, the distinction between ideal and non-ideal theory is
widely deployed despite there being no widely accepted definition of the precise
nature of the distinction.² On some accounts, ideal theory is reserved for the analysis
of social institutions under the assumption of full compliance with appropriate moral
norms by (almost) all agents, so that problems associated with agent motivation are
absent. At the same time, ideal theory is often taken to apply only in circumstances in
which (almost) all agents are fully informed. If these positions are adopted, so that an
ideal account of taxation would take all political and economic agents as well
motivated and fully informed, then it might be argued that the widespread use of
an essentially coercive instrument like taxation would have at most a minor role to
play in an ideal setting, since ideally informed and motivated agents would surely
know what they should contribute and be willing to make that contribution volun-
tarily.³ In this way, the general topic of genuinely coercive taxation seems more at
home in the context of non-ideal theory.
¹ Many of these aspects of taxation are discussed in Kaplow (2011). For discussion of progressivity. see
Diamond and Saez (2011); for discussion of the balance between direct and indirect taxation, see Cremer,
Pestieau, and Rochet (2001); for discussion of tax competition, see Wilson (1999), and Keen and Konrad (2013).
² See, for example, Mills (2005), Robeyns (2008), and Simmons (2010); for discussion and further
references, see Hamlin and Stemplowska (2012) and Stemplowska and Swift (2012).
³ Some apparently coercive taxation might be relevant even in an almost ideal context, for example
where it was difficult for individuals to assess their own contribution and where the tax authority plays the
WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 
A second aspect of taxation that suggests its generally non-ideal nature relates in
more detail to the epistemic context in which taxation operates and focuses on the
information available to the tax authorities. In the economics literature a distinction
is commonly made between first-best tax policy and second-best tax policy (where
second-best is taken to include third-best and so on). The point of this distinction is
simply that in a first-best (or ideal) world the taxing authority is assumed to have full,
perfect, and costless information on all economic agents and activities and is itself
perfectly motivated to pursue the public good. In such a first-best world tax policy is
relatively simple. The taxing authority could achieve almost all of its ends, including
those relating to the distribution and redistribution of resources, by a set of agent-
specific, lump-sum taxes. So that each economic agent would simply be assessed as
owing a particular amount in tax, or entitled to a particular amount of additional
income in the form of benefits or negative tax payments, without those taxes/benefits
being expressed as taxes on any particular economic variables or activities. Such
lump-sum taxes are argued to be first-best or ideal in the sense that they have no
impact on decision making by agents at any margin and so do not distort economic
activity away from its first-best or ideal outcome.⁴ To the extent that the taxing
authorities may legitimately wish to have an impact on decision making at the
margin in some specific cases (for example, in order to internalize externalities
such as pollution assuming such externalities persist in an ‘ideal’ world) specific
non-lump-sum taxes and subsidies could be used alongside lump-sum taxes, but
such regulatory or corrective non-lump-sum taxes and subsidies would not be used
in a first-best world as a means of revenue raising.⁵ Almost all of the economic
analysis of taxation therefore relates to the discussion of taxation in the non-ideal
setting in which tax authorities lack sufficient information to implement first-best or
ideal policies.
The third and final point relating to the non-ideal nature of most economic
discussion of taxation picks up on the motivation of the tax authority or government
itself. If decision making on tax matters is in the hands of agents motivated by
considerations that depart from, or go beyond, some agreed idea of the public
role of providing information to individuals which allowed individuals to coordinate their actions
(although in a wholly ideal world, citizens would be taken to be fully informed). This assumes that the
tax authorities have full information, even if citizens do not; an assumption discussed in the next
paragraph.
⁴ The basic idea is that a tax on an activity will generally have two effects: one to raise the relative price
of the taxed activity thereby causing taxpayers to substitute away from that activity, the other to reduce the
real income of the taxpayer. Roughly, a non-distortionary (lump-sum) tax is one in which there is an
income effect but no substitution effect. For a textbook discussion, see Myles (1995).
⁵ Of course, regulatory measures other than taxes and subsidies could also be employed to internalize
relevant externalities in at least some cases. Following on from the previous footnote, a perfect corrective
tax is one that has the desired substitution effect, but no income effect. This means that any revenue raised
by a corrective tax should be returned to the taxpayer as a lump-sum, so that ideal corrective taxes raise
no revenue.
 ALAN HAMLIN
interest, or if there is some risk that this will be the case; or if tax decisions are
influenced by some political process (democratic or otherwise) that is not guaranteed
to track the public interest perfectly, then we might expect the tax system to depart
from the ideal. And in guarding against such an outcome we might wish to put in
place structural or other constraints to limit the extent of such departures. But such
constraints will themselves be costly and so will place the system as a whole in non-
ideal territory.
In each of these senses, which will be explored in more detail in what follows, the
specifics of tax policy are a matter that will be influenced by a multitude of non-ideal
factors and considerations. And it is precisely because of the relatively complex
nature of taxation in a non-ideal world that normative political philosophy may
need to attend to the lessons that can be drawn from the economic analysis of non-
ideal taxation.
The remainder of this chapter is organized as follows: sections 1.2, 1.3, and 1.4
outline the OT, PE, and TC approaches to taxation respectively, sketching their basic
characteristics. Section 1.5 then offers discussion of the three approaches, addresses
the issue of the relationship among the approaches, and considers the lessons that
may be drawn for a more general normative political philosophy of taxation.
1.2 The Optimal Tax Approach

The OT approach is now firmly established as the mainstream approach within the
economics literature, although it is important to note that this has only been the case
since the 1970s. The previous ‘Public Finance’ orthodoxy was based on a more ad hoc
range of normative principles and analytic ideas including ‘taxable capacity’, ‘hori-
zontal and vertical equity’, ‘willingness to pay’, and ‘ability to pay’.⁶
Optimal tax theory is essentially normative and essentially holistic. Normative
because it derives its claim to optimality from the explicit specification of a value
function; holistic because it attempts to design an entire tax and benefit system,
rather than treating individual taxes and benefits separately.⁷ Although it is known as
the optimal tax approach, the approach is not restricted to the study of taxes but
includes the distribution of benefits and subsidies (which might be construed as
negative taxes). The OT approach conceives of the basic problem of designing a tax
and benefit system as a form of double maximization problem. Government is
⁶ For a presentation, see Musgrave (1959) or Allan (1971). It is worth noting that it is this earlier
orthodoxy, rather than the OT approach, that provides the target for many of Murphy and Nagel’s (2002)
criticisms. In the UK context the Meade Report (1978) was the last major review of tax structure that
employed the Public Finance view. The most recent review, led by James Mirrlees, IFS (2010), adopts the
OT approach.
⁷ By contrast the previous Public Finance orthodoxy might be considered to be rather piecemeal in its
approach, typically analysing the implications of specific normative principles for specific forms of tax/
benefit, or comparing two or more forms of tax/benefit.
WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 
modelled as choosing a tax/benefit system to maximize a value function subject to the

fact that agents (both individuals and any non-individual economic agents) will take
the tax/benefit system as given when making their own maximizing choices. In this
way, the OT approach builds the optimizing behaviour of economic agents into the
structure of the tax design problem. More specifically, it does not assume that there
exists some pre-tax situation in which all economic agents have a right to their
income (or wealth or consumption), so that taxes and benefits have to be justified
relative to that baseline. Rather, the tax/benefit system is seen as one of the factors
that shape the behaviour of economic agents and so influence economic outcomes
(including both pre-tax and post-tax levels of income, wealth, and consumption). To
put the same point otherwise, economic outcomes are determined in part by the
social rules and norms in place (including tax and benefit rules) and in part by
the behaviour of agents under those rules. In the absence of specific tax/benefit rules,
or if alternative rules had been in place, behaviour would have been different and
both pre- and post-tax allocations of economic burdens and benefits would also have
been different. In recognizing this point, the OT approach attempts to look through
the optimizing behaviour of economic agents in order to put in place that set of tax/
benefit rules which can be expected to yield the optimal outcome in terms of the
specified value function, once all agents have reacted to those rules.⁸
OT theory is concerned with constrained (second-best) optimality rather than
full (first-best) optimality; that is, it explicitly identifies constraints that might be
expected to prevent us from reaching the ideal or first-best situation and seeks to
identify the best available tax/benefit system given those constraints. Most funda-
mentally, as already sketched, the exercise is constrained by the nature of the
behaviour of economic agents and by the information available to the tax authority
or government. In relation to the first of these, the intention is to model economic
agents as they are rather than as they should be; although, as with any modelling
exercise there is inevitably a degree of abstraction from reality. Agents are typically
modelled as rational rather than moral, in that they are assumed to pursue their own
interests rather than the social value function that underlies the normative status of
the OT approach itself. In this way, the overarching purpose of the OT approach is to
determine the pattern of tax/benefit rules which maximally serves the defined public
interest on the assumption that economic agents operate rationally under those rules.
In relation to the second set of informational constraints, as already noted, if all
information were fully and freely available to government, the first-best tax/benefit
system, involving lump-sum taxes on, and benefit payments to, individual agents,
would be available. But these optimal lump-sum transfers will typically depend on
⁸ Among the classic papers in the development of the optimal tax approach are Ramsey (1927), Mirrlees
(1971), Diamond and Mirrlees (1971a, 1971b), and Atkinson and Stiglitz (1976). For influential surveys,
see Stiglitz (1987) and Slemrod (1990). For a specific focus on fair income taxation, see Fleurbaey and
Maniquet (2006). For a recent book-length discussion, see Tuomala (2016).
 ALAN HAMLIN
underlying characteristics of individual agents and specifics of economic activity that

are unobserved.⁹ Exactly what details are observable, and therefore which tax/benefit
systems are feasible in informational terms will vary from time to time and place to
place, and we will return to this point below. The unobservable or unobserved nature
of potentially relevant information may be seen as a key aspect of the non-ideal
nature of the OT approach.
We may now turn to the structure of OT theory itself. As already indicated, the
normative nature of this approach derives from the requirement to specify the value
function that is taken to represent the public interest or social welfare. In practice, the
value functions actually employed in the OT literature are generally welfarist in
nature, defined in terms of the levels of utility or welfare of each individual in society
with parameters to reflect inequality aversion. Clearly the interpretation of ‘utility’ or
‘welfare’ is very flexible, as is the degree of inequality aversion that may be specified;
indeed, one of the points of the exercise is to see how responsive the design of the
optimal tax system is to different detailed specifications of the social value function.
Once a value function is specified the next step is to model the population of agents
and it is here that the potential complexity of the model is most apparent. In the
simplest possible model we might assume that all agents are essentially identical, so
that no issue of (re)distribution can arise. In moving away from this extreme case we
might introduce heterogeneity in just one dimension, so that individuals differ only
in respect, say, of their productivity. The next step might be to allow individuals also
to differ in their preferences; and so on.
As already noted, everything then depends on what information is assumed
available to government and so what types of taxes are taken to be feasible. In
some situations, perhaps particularly relevant in less developed countries, it might
not be possible or practical to monitor all employment, so that an income tax might
not be feasible. In such cases the only feasible taxes might be a range of commodity
taxes, including taxes on imports and exports, since transactions in commodities are
relatively easy to monitor. In more advanced economies, which have invested in the
infrastructure of data collection, a much wider range of taxes might be feasible.¹⁰
Since commodity taxes are usually thought of as less informationally demanding
than income or wealth taxes, the simplest, benchmark example of the OT approach is
one in which only commodity taxes are considered and all individuals are assumed to
be identical. This is the setting of Ramsey’s original 1927 paper which first introduced
the structure of the double maximization problem and so marked a distinct step from
⁹ Some relevant information may be unobservable in principle; other information may be observable
only at high cost, where that cost may be financial or in terms of other aspects of relevance to overall social
value (e.g. in relation to the value of privacy). An example of the former might be an individual’s true
ability (rather than proxy measures such as educational attainment); an example of the latter might be each
individual’s consumption of particular goods such as tobacco or alcohol.
¹⁰ For discussion of issues concerning taxation in developing countries, see Burgess and Stern (1993)
and Gordon and Li (2009).
WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 
the prevailing literature which operated on the normative basis of a number of

relatively ad hoc principles rather than an integrated value function, and which
tended to treat taxes individually rather than the whole tax system. In this context,
where we are only concerned with efficiency, since the issue of distribution does not
arise, the optimal tax structure will involve a set of differentiated commodity taxes,
with higher tax rates on those commodities that are relatively price insensitive and
lower taxes on commodities that are more price sensitive. In this way, the marginal
distortion associated with taxing each commodity can be equalized and the total
efficiency distortion minimized.
To illustrate the way in which assumptions on the heterogeneity of the population
and the feasibility of alternative taxes affect the optimal design of a tax system, we
should consider cases which differ from each other in just one respect. For example, if
we continue to assume that income taxes are infeasible and only commodity taxes are
available, but allow heterogeneous agents, so that distribution becomes an issue, we
must now use our commodity taxes not only to raise revenue with as little efficiency
loss as possible, but also to influence the distribution of welfare. In this case, the
optimal tax system would still exhibit differential commodity taxes, but the pattern of
tax rates would now reflect two forces: one, as before, reflecting price responsiveness
and efficiency loss, the other placing higher tax rates on commodities that might be
thought of as luxuries, and lower rates on necessities, so as to generate a degree of
progressivity into the system.¹¹ Since there is no guarantee that these two forces will
pull in the same direction, it is generally the case that the desirable redistributive
impact of the tax system will imply greater distortions to efficiency. The greater the
inequality aversion built into the underlying value function, the greater the emphasis
on the redistributive aspect of taxation and the greater the resultant loss in efficiency.
Even in this very simple case, then, we see that the OT approach is essentially
concerned with balancing the various costs associated with a necessarily imperfect
tax system, so as to produce the optimal overall result.¹²
If now we consider a situation in which both income taxes and commodity taxes
are available, a progressive income tax will typically be the optimal means for
addressing distributional issues, with commodity taxation addressing efficiency
issues. This will typically imply a wide commodity tax base with a uniform tax
rate, although higher rates may be levied on goods that are complements with leisure
and to internalize specific externalities (such as specific taxes to address issues such as
environmental pollution).
While the tax/benefit system that is revealed as optimal may vary considerably
from case to case, reflecting both different informational constraints and different
specifications of the social value function, OT theory provides a framework in which
¹¹ Where ‘luxuries’ are those goods and services whose consumption is strongly positively correlated
with income, and ‘necessities’ those where consumption is largely independent of income.
¹² See, for example, Kaplow (2008).
 ALAN HAMLIN
an explicit normative value function is set in the context of relevant feasibility

constraints to derive the appropriate overall tax and benefit structure. There are a
number of practical implications of the OT approach that are relatively robust across
detailed settings. Mankiw, Weinzierl, and Yagan (2009) identify eight general, struc-
tural lessons from OT theory and discuss the extent to which these lessons have
influenced actual tax policy. The eight are:
(1) Optimal marginal tax rate schedules should depend on the distribution of
ability (rather than merely the distribution of income or wealth);
(2) The optimal marginal tax schedule could decline at very high levels of income
(even in systems which are overall progressive);
(3) A flat tax, with a universal lump-sum transfer, will often be close to optimal;
(4) The optimal degree of redistribution rises with wage inequality;
(5) Direct taxes should depend on personal characteristics as well as income;
(6) Only final goods (rather than primary or intermediary goods used in the
production of final goods) ought to be taxed, and typically they ought to be
taxed uniformly;
(7) Capital income ought to be untaxed, at least in expectation;
(8) In stochastic, dynamic economies, optimal tax policy is complex.
Merely listing these lessons is sufficient to indicate that while tax reforms in many
countries have moved in the direction indicated by some of these lessons, the pattern
is by no means uniform or complete. It is certainly the case that in many advanced
economies the top marginal rates of income tax have declined, direct tax profiles
flattened, and commodity taxation moved toward uniformity often via versions of
value added tax (VAT); but the patterns of reform in capital taxation and universal
benefits are much less clear. Of course, the eighth and final lesson is that optimal tax
systems will be complex and different across settings, but even so the impact of the
OT approach on tax reform in practice has been rather slow and partial; perhaps for
reasons to be discussed below and in the following sections.
Common criticisms of OT theory focus on the specification of the value function
employed, issues surrounding the identification of relevant agents, and the lack of
political analysis. I will touch on each area in turn.
At the most basic level, the specification of a value function, whatever its details,
indicates that the OT approach is essentially teleological in its structure, seeking to
maximize overall net benefits, whatever the detailed account of benefits and costs
may be.¹³ While it is true that the OT literature is presented in teleological and
consequentialist terms, this does not imply that OT is incapable of recognizing at
least some more deontological claims: specifically, those that can be expressed as
constraints which may be built into the OT exercise of constrained maximization.
¹³ For a discussion of the consequentialism/deontology distinction in the context of taxation, see

Murphy and Nagel (2002: 41–5).
WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 
Of course, to the extent that such constraints dominate, there may be little scope for
optimization within the permissible set of tax policies, so that the optimization idea
will lose much of its force. But the idea that deontic considerations (almost) fully
determine tax policy seems extreme, and the OT structure seems to be a suitable
means of balancing those deontic considerations that can be modelled as side-
constraints with more teleological and consequentialist considerations.
Within the teleological structure of the OT approach, one might also criticize
welfarism as an appropriate basis for identifying social value.¹⁴ And it is true that, in
the OT literature there is a general assumption that efficiency and equity in relation
to welfare are the only relevant normative categories, but again, this does not seem
essential to the OT approach per se. All that is essential here is that there should be an
explicitly specified value function. Now, of course, the requirement that the value
function be explicit forces clarity and, if the intention is to perform a practical
exercise, the need to specify the value function in terms that are tractable may
force a degree of simplification, but there is nothing in the structure of the OT
approach (as opposed to any particular application of that approach) that involves
a deep commitment to welfarism or any other substantive view of the nature of
the value to be maximized. In principle, at least, the OT approach is capable of
working with any well-specified value function, whatever its more philosophical
underpinning.
On the question of the identification of the relevant agents for the purposes of tax
policy formulation, OT theory, and all other approaches to taxation, face significant
issues. One obvious problem lies in the treatment of individuals and families (or
other groupings of individuals); another issue revolves around the status of corpor-
ations and other institutional agents. OT theory is sometimes criticized for being too
individualist and ignoring corporations. Now, any practical tax policy will have to
come to some view on these questions—but it is not obvious what that view should be
or how the factors that influence our choice of position on these questions interact
with the OT approach (or any other approach). Whether we treat individuals or
families or households as the appropriate units for tax and benefit purposes is a
complex issue, and our answer may be different in different parts of the same system
(e.g. we might tax individuals, but provide benefits based on families), and much may
depend on issues of information availability and reliability (as is stressed by the OT
approach). Similarly, whether we view corporations and other institutions as taxable
units in themselves or treat profits and other such variables as accruing to individual
shareholders is a complex matter, and will again depend on a variety of factors. And
these questions would have to be answered, at least provisionally, in order to provide
a starting point for designing a tax system, but once they are answered, and however
they are answered, there is still a need to design the tax system on the basis of those
¹⁴ The debate here is wide-ranging and the literature huge; see, for example, Dworkin (2002), Kaplow
and Shavell (2002), Cohen (2008), and Sen (2009).
 ALAN HAMLIN
answers, and this seems to be the point at which the OT approach becomes
relevant.¹⁵ In other words, the OT approach does not in itself answer all of the
questions that require answering about a tax/benefit system; it merely provides a
structure of analysis that both helps to identify the relevant substantive questions and
organizes the answers to those questions in a manner that balances all of the concerns
identified as important.
The final criticism of OT theory to be considered here is that it ignores politics.
This criticism has two aspects; first, that the OT approach adopts the heroic assump-
tion that government itself is ideally motivated (while economic agents are modelled
in non-ideal terms as rational rather than moral), and second, that while focusing
on informational feasibility, it ignores any notion of political feasibility.¹⁶ These
criticisms clearly carry weight, but might also be said to be criticizing the OT approach
for failing to do something which it does not set out to do. OT theory is not intended as
a model of the process of tax design or reform; rather it is a framework for articulating
the normative standards relevant to the design of tax/benefit systems. The political
challenge is taken up by the PE and TC approaches to be considered below.
1.3 The Political Economy Approach

By contrast with the OT approach, the PE approach may be seen as broadly positive
rather than normative in nature and focused on providing an analysis of a tax/benefit
system seen as the outcome of a democratic political process. While the analysis of
the political process is broadly economistic, in the sense that it builds on the ‘public
choice’ school of rational actor political analysis, the analysis does not depend on any
specific economic analysis of the tax/benefit system itself.¹⁷ The essential question
addressed by the PE process is, what tax structure might emerge from, and be
supported within, a democratic political process, and how might the answer to this
question depend on the details of the democratic process.
The PE approach typically builds on the Downsian model of democracy.¹⁸ In this
setting neither the tax authority nor individuals are modelled as ideal moral agents.
Politicians are taken to be motivated by the prospect of winning elections, so that
they offer whatever expenditure, tax, and benefit package will maximize the prob-
ability of winning the next election; while individuals, as voters, are assumed to vote
¹⁵ Another area in which genuine questions arise relates to the specification of time periods for tax
purposes. In the context of income taxation, for example, should we be concerned with weekly income,
monthly income, annual income, or lifetime income? See Fennell and Stark (2005); for the specific issue of
the taxation of savings, see Atkinson and Sandmo (1980).
¹⁶ For a discussion of aspects of feasibility, see Hamlin (2017) and references therein.
¹⁷ For an overview of the public choice literature, see Mueller (2003); for a review of its application to
tax policy, see Holcombe (1999).
¹⁸ See Downs (1957); for extension to representative democracy, see Besley and Coate (1997).
WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 
rationally in pursuit of their self-interest. A benchmark case in this literature is the

case of majoritarian voting for a purely redistributive tax and benefit system involv-
ing a simple flat-rate income tax which finances equal lump-sum payments to all
citizens. The argument here brings together three points. First, a simple analysis of
the logic of the tax system under discussion: if, for simplicity, one assumes that the
tax system itself is costless to operate, so that all taxes raised are returned as benefit
payments, and (for a moment) that pre-tax incomes are independent of the tax rate,
it is clear that anyone with pre-tax income below the mean level will gain from a
system which taxes income proportionately and distributes benefits as lump-sums,
while anyone with pre-tax income above the mean will lose. The second point derives
from the basic idea of the Downsian median voter theorem, which indicates that, in a
simple majoritarian election between two candidates or parties we can expect the
policy offered by the candidates to converge on the policy that would be chosen by
the median voter. The third point is then an empirical claim, that the typical
distribution of income is skewed so that median income is less than mean income.
Taking these three points together indicates that the majority would vote for a
redistributive tax scheme: indeed, in the simple case sketched, the majority would
vote for full equalization of post-tax incomes by imposing a 100 per cent tax rate and
redistributing all revenues equally.¹⁹
Of course, moving away from this simple and extreme case in the direction of
realism modifies the result. Most obviously, if one drops the assumption that pre-tax
incomes are independent of the tax rate, so that the tax rate will have a disincentive
effect on income generation, it is clear that 100 per cent tax rates would never be
chosen. Nevertheless, the simple model will still give rise to redistributive taxation,
limited by the extent of the disincentive effects. In essence, redistribution will occur
up to the point where the marginal benefit to the median voter associated with any
further increase in the tax rate is zero.
This type of analysis can be extended to consider commodity taxes and other taxes
alongside income taxes. The models become more complex, but the essential struc-
ture remains: as part of political (i.e. electoral) competition, rival parties will face
incentives to design tax structures that, for any given level of total tax revenue,
maximize political support. The basic result is that the tax structure that arises as a
political equilibrium is such that the marginal loss of political support per £ of tax
revenue raised is equalized across all taxes, and across all tax payers.²⁰
¹⁹ Among the classic papers in this tradition are Foley (1967), Romer (1975), Roberts (1977), and
Meltzer and Richard (1983).
²⁰ The point here is that, if this marginal loss were not equalized, it would always be possible to increase
political support at no cost in terms of tax revenue by marginally increasing the tax in the area with the
lower marginal loss and decreasing the tax in the area with the higher marginal loss. Thus, equalization of
marginal loss is a necessary condition for the maximization of political support for any given level of tax
revenue.
 ALAN HAMLIN
Of course, full equalization of political support at all relevant margins may not be
feasible in practice; it may be necessary, for reasons of information availability, cost,
and convenience, to group commodities and individuals and treat elements of each
group equally. However, grouping of this sort implies political losses, so the question
of how to group in order to minimize these political losses arises; that is, how many
tax bands for income tax, how many groups of commodities with different tax rates,
are politically sustainable? The logic of the PE approach on such questions is that
political parties seeking election will simply balance administrative costs against
political costs, and so offer the pattern of grouping that minimizes total costs as
they perceive them.²¹
The PE approach predicts complex tax structures with the number of rate bands
and commodity groups being constrained by administrative costs and political
considerations. Tax structures, rates, and exemptions are all determined jointly in
political equilibrium and so will reflect the relative voting power of groups in society.
Political parties, in this approach, can be seen as playing groups of voters off against
each other in attempting to raise revenue at minimal political cost in terms of votes
lost. This approach also suggests that the tax/benefit system may not be stable over
time. Shifts in underlying technical, economic, demographic, and political variables
will induce shifts in the political equilibrium. Tax reform will be politically driven,
rather than responsive to more fundamental economic, social, or normative analysis.
The tax and benefit system will be open to political manipulation by special interest
groups, so that we would expect to see log-rolling and other political manoeuvres. In
particular we would expect to see relatively small well-organized groups lobby
successfully for tax breaks at the expense of relatively large but disorganized groups.
There is certainly no guarantee that the tax/benefit system that emerges as a political
equilibrium will satisfy any particular efficiency criteria, or any more general nor-
mative criteria.
The PE approach is not directly normative in its approach; it seeks to explain the
observed pattern of taxes and benefits and the processes that drive changes in that
pattern, rather than make proposals for reform. However, to the extent that it
provides the basis for a diagnosis of political failure in the tax and benefit setting
process, it might be taken to provide a counterbalance to the OT approach’s
identification of an optimal tax and benefit system. The extent to which the PE
approach actually explains the observed pattern of taxes and benefits, how tax
systems evolve, and how they differ across jurisdictions, is limited by the relative
paucity of detailed empirical studies, but it is hardly surprising that there is at least
considerable evidence that political factors and the operation of the democratic
process itself does influence both the structure and the detail of tax policy.²²
²¹ For a detailed analysis that considers the grouping of taxpayers and economic activities, see Hettich
and Winer (1988).
²² See, for example, Steinmo (1989), Slemrod (1999), and Hettich and Winer (2005).
WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 
1.4 The Tax Constitution Approach

The TC approach returns to a more explicitly normative standpoint but one that
emphasizes the political dimension, albeit in the more contractarian, constitutionalist
perspective associated with the constitutional political economy literature.²³ While
the PE approach stresses the impact on tax policy of electoral competition, the TC
approach focuses more broadly on the possibility of constitutional controls on the
discretionary power of government elites, whether those controls operate via elect-
oral competition or otherwise. In contrast to the OT approach, the TC approach does
not assume that governments are benignly motivated to maximize an appropriate
value function, but rather assumes that government will pursue its own objectives
(which will include, but may not be limited to, the seeking of re-election) constrained
by binding constitutional arrangements. From this perspective, then, the TC approach
argues for a fiscal constitution that limits governmental discretion, both by restricting
the set of tax policies that the government can implement and, perhaps, by imposing
substantive limits on tax revenues, or fiscal deficits, or other relevant variables.²⁴ In
common with the OT and PE approaches, the TC approach models individuals as
rational rather than moral.
The benchmark case in this literature assumes that government is a revenue
maximizer and then investigates the constraints on the power to tax that would be
supported by a representative citizen behind an appropriate constitutional veil of
ignorance.²⁵ The general observation is that the incentive to limit exploitation of tax
bases cuts across many of the arguments from OT theory. For example, standard
economics and the OT approach tends to support broadly defined tax bases
(a comprehensive definition of income, a wide range of commodities, etc.) on the
grounds that the broader the tax base, the less distortionary will be the optimal tax
rate structure associated with any given level of revenue to be raised. However, the
TC approach points out that, in the absence of well-motivated government, broader
tax bases clearly provide greater opportunities for tax exploitation, so that constitu-
tional restrictions on allowable tax bases might be motivated despite their narrowly
economic inefficiency.²⁶ One way of viewing this point is that by restricting access to
certain tax bases, a tax constitution would ensure that there are some tax-free areas
²³ For an overview of the constitutional political economy literature, see Brennan and Buchanan (1985),
Brennan and Hamlin (1995), and Buchanan (2004).
²⁴ The classic reference in relation to the tax constitution is Brennan and Buchanan (1980). The tax
constitution might be seen as part of a more general fiscal constitution that also applies constitutional
controls to expenditure policies and, importantly, borrowing. See Buchanan and Wagner (1977) and
Buchanan (1987). The TC approach may be seen as an example of the ‘Principal–Agent’ approach to
constitutional politics, where citizens are the principals, politicians the agents, and the constitution is the
‘contract’ that seeks to limit the agents power to exploit the citizens.
²⁵ The logic is extended in Brennan and Buchanan (1985). See also Hamlin (2014).
²⁶ One possible restriction on the set of allowable tax bases that might meet generally shared moral
intuitions as well as limiting the scope for tax exploitation might involve disallowing a commodity tax on
basic food.
 ALAN HAMLIN
of the economy to which citizens can escape, or exercise an exit option, so limiting
governmental power.
Similarly, the TC approach might motivate restrictions on rate structures aimed at
reducing the monopoly power of government: imposing a requirement of a common
rate of tax on different commodities, and/or a common rate of tax on different
individuals will reduce the ability of government to ‘discriminate’ and so raise additional
revenue; equally, a requirement that the rate structure be progressive will typically
reduce the maximum revenue that a government can raise, since unconstrained revenue
maximization will normally imply regressive taxation. In some cases these conclusions
run counter to the mainstream OT theory (e.g. on the broad vs. narrow tax base), but
in other cases they are consistent, although derived from very different logic (e.g. on
progression, or on uniform rates).
A further aspect of a tax constitution concerns the allocation of taxation powers
across levels of government. In the OT approach, it is standard to think of a single
government designing the entire tax/benefit system; not least since (given the
assumption of a well-motivated government) there will be efficiency gains from an
integrated approach to tax policy. But in the TC approach the separation of tax
raising powers across multiple agencies within a broadly federal structure may be
appropriate to reduce an effective monopoly power and to set up forms of internal
tax competition.²⁷
The constitutional nature of the controls envisioned implies that the controls must
be relatively general, and this in turn implies that they cannot hope to achieve fine-
grained control. If constitutional requirements are thought of as applying equally at
all times, but tax policy is thought of as varying over time both cyclically and in
response to particular economic events, it is clear that any constitutional controls
motivated by the TC approach face a trade-off. If they constrain government too
tightly, they will disallow the flexibility that may be required for tax policy to respond
to circumstances, but if they are loose enough to allow governmental discretion to
manage in the face of varying circumstances, they will also allow at least some tax
exploitation. In this way, a tax constitution has to balance inefficiency (and/or
ineffective redistribution) against greater insurance against political exploitation.
There is also the question of the most appropriate nature of the constitutional
controls to impose in attempting to limit governmental power. If, as in the bench-
mark case, the central concern is that government may overuse its tax raising powers,
it might seem natural to specify the relevant constitutional control in terms of a
maximum scale of tax revenues (perhaps as a percentage of GNP), leaving the details
of how this tax is raised flexible. Although if the concern is with over-expansion of
government expenditure, such a constitutional constraint may simply incentivize
²⁷ Tax competition may take a number of forms, some relying on mobility of agents between regions/
jurisdictions, others relying on voters using practice in other jurisdictions as a yardstick against which to
judge their own government: see Wilson (1999) and Keen and Konrad (2013).
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Lord Galton explains to the Home
Secretary his
theory—or rather, certitude—upon the
whereabouts of the Great Emerald.
"Yes, I know what you'll say ... he got the fright of his life over the Mullingar
Diamond. You'd say he'd never dream of doing it in the house of the head of the
family." (A dignified look passed over the features of the Chieftain of the de Bohuns.)
"Then he's such a clumsy old ass that you can't imagine him doing it so quickly. After
all, it took him half an hour to fish the Mullingar Diamond out of an open drawer, and
even then he left things topsy-turvy. You'll say all that, and if I were just guessing I'd
half agree with you. But I'm not guessing. And I tell you he's got it. I don't pretend to do
any of this private detective work, and I've never read one of their rotten mystery
stories in my life. That's how I've kept my common sense clear—men who are blown
upon need their wits about them. I know Bill's got it for a very simple reason—I've seen
it in his hand with my own eyes. Some one told the old goat that the place to hide
anything was where it would be most obvious and simple. He's got it in the left-hand
pocket of that damned smelly overcoat he wears; but he's such a nervous old balmy
that he can't help fingering it the whole time; and when he thinks no one's looking he
pulls it half out and looks at it furtively out of the corner of his eye. Dons are always as
mad as hatters. He did it three separate times while we were out walking just now. He
couldn't help himself. He's too much shut up inside his own addled head to notice other
people. And I'll tell you something else, which is also common sense. He won't take it
out of that pocket till he's left the house. An overcoat's the only thing they don't brush or
fold up, in this house; you're old-fashioned, with these things on pegs and not on
marble tables. He knows that. It'll hang there on the peg till he goes away. That's the
whole point of leaving it in such a place.... And it's there now. You look for it there, and
you'll find it."
The Home Secretary put on his expression of gravity in the third degree—the
expression with which he would meet a deputation for saving an innocent man from the
gallows and gratify them with a majestic refusal.
"What you say, Tommy," he began, slowly, "is very serious. Very serious indeed. In
my judgment ..."
"Oh, look here," said Lord Galton impatiently, "cut out all that! He's not in the hall.
He went off to the library, and when he gets there he strikes root. There'll be no one
about—they're laying the table. Come with me, and I'll prove it."
"I hesitate ..." began the Home Secretary. His powerful young relative, by way of
reply, hooked him by the arm, unlocked the door, and marched him straight out into the
hall. The ghost of what might well have been an ancestor—for we all have such things
—must have mourned, if, as such things do, it had taken up its kennel in a suit of
armour standing by the side of the fireplace in the hall: it would have mourned to see
the head of the de Bohuns stand by while the deed was done.
Lord Galton went smartly up to the bunch of coats, plunged his hand into the left-
hand pocket of that one wretched old garment, and turned it sharply inside out, so that
the damning evidence should fall before his cousin's eyes. There fell out no small
amount of gathered dirt, some paper torn into minute fragments, and a stub of pencil;
also a rather repulsive handkerchief—nothing more. Nothing rang upon the hall floor.
There was no Emerald.
Lord Galton for once did a weak thing—or a superstitious one. As though not
trusting his senses, he picked the repulsive handkerchief up and shook it. But there
was no emerald. Indeed, one could see and hear by the way it had fallen that there
was no emerald within its large but unattractive folds. He knew that well enough before
he touched the rag—but it was a forlorn hope.
It was the older man who hastily picked up these evidences, not of the Professor's
dishonour, but his own, and rapidly put them back where they belonged; darting a
glance over his left shoulder and sighing with relief to find that there was still no one
about, not the sound of a distant footfall, not the glide of a serf. His companion's face
was darker and flushed.
"I could have sworn ..." he opened. Then he added, murmuring, "He must have
taken it away."
"I wish we hadn't ..." began the Home Secretary, and then switched off to, "You're
quite sure you saw it with your own eyes, Tommy?"
"Absolutely certain," said the young man, with a fearless steady gaze, and proud to
be telling one truth at least.
The Home Secretary held his chin in his hand, stood silent for a good quarter of a
minute, and then said something characteristic of his profession as a statesman. He
said, "Humm!"
* * * * * * *
What had happened?
Dear—or, if that is too familiar a term—charming reader, this is not one of the
detective stories of commerce. You shall know all about it beforehand, as you have
already known all about it, step by step. You shall be subjected to no torture of
suspense. We will leave that to the people of our story. They were born for it.
What had happened was simple enough. The Professor had gone off to the library.
He wanted to make certain of the Society at Berne in the Almanac de Gotha. With men
such as he, an obsession having cropped up has a horrid fascination for the mind and
holds it. He was worrying about the exact title: whether it was Crystallographique, or
Crystallographische, or de Crystallographic. He was determined to get it right.
He kept on talking to himself, as was his learned habit, repeating with a hideous
smile the words, "Crystals ... ah! yes ... crystals.... Crystals, eh? Crystals ... yes....
Crystallograph ... something, eh? Now then, it'll be among the books of reference, eh?
Crystals.... Oh, what a dirty trick that was of Leader to play!" His left hand was fumbling
in the left-hand pocket, where he always kept those indispensable instruments of
research, his large tortoise-shell spectacles. His hand groped. He muttered the word
"Berne" three times in less and less confident tones. Then the message so tardily
conveyed reached his erudite brain. "Oh! ... I've lost my spectacles!"
He never got used to the shock of losing his spectacles, though he suffered from it
a dozen times a day. Each time he lost them it was all up with him; each time he went
through a crisis. Here he was in the depths of the country and without eyes! There was
a touch of agony in his muttering now, as came louder the words, "My spectacles, oh,
ah! my spectacles ... now where could I ..." He bent his powerful will to the control of
his, if possible, less powerful memory; he traced events back one after the other for a
good three minutes, and then he remembered that he had gone out in his overcoat and
had left it hanging in the hall.
The Professor gave an odd little scream
like a shot
rabbit.
He shambled out and groped in the recesses of the left-hand pocket, and there,
side by side with his familiar handkerchief, the faithful companion of many days, was
the feel of the rough spectacle case; it was all right, but also, what annoyed him a little,
a pebble. It was natural that pebbles should get into one's pockets when one was out
walking in the country; at least, he thought it was. He thought it went with those terrible
animals called cows, and all that sort of thing. But he pulled it out mechanically, felt the
prick of a pin and then gave an odd little scream, like a shot rabbit. Next (excuse him!)
he rapped out a frightful oath. "My God!" cried the aged blasphemer. No less. But the
violence of his emotion must have shaken his standards.
He stood there, with the emerald in the palm of his right hand, staring at it,
distraught. And once more in his bewilderment he fell to repeating the name of his
Creator—upon whose existence indeed, he had more than once learnedly discoursed,
concluding upon the whole against it.
It is said that under the strain of very severe emotion men do things unnatural, out
of themselves. And behold! Professor William de Bohun behaved for the next half hour
like a whole group of characters, any one of whom you would have said he could not
have thrown himself into for the world. Terror inspired him, and the tragic sense of
impending doom.
It must be got rid of!
He had a mad impulse to swallow it. Luckily he restrained it in time: it was too big,
its metal fastenings too angular for health; and then, there was the pin.
After he had given up the swallowing baulk, another, far more feasible, arose and
formed itself more clearly. There appeared before his mind's eye a young, round naïve
face, fresh to the world, an awkward figure, the whole standing out against the
background of known poverty. It was the figure of McTaggart, the journalist.
A wicked glint illumined the Professor's eye.
"Oh! Baleful, hellish light, thus to suffuse

The inactive optic, wontedly so dulled,
But now with evil purpose all inflamed!"
as Milton has it in the matter of the fish-god, Dagon.

He made no excuses for himself. He recked nothing of the young man's ruin. He
plunged heartily and heavily into sin. As his colleague the Professor of Pastoral
Theology had once finely quoted in his Luther Commemoration Lecture, "Si peccas
pecca fortiter."
It is generally held by the more liberal school among theologians that man acting of
his own free will is not mastered by an external evil impulse, but may well submit to it.
So it was with Cousin William on this never-to-be-forgotten occasion of his chief
downfall.
A Minor Devil happened at that moment to be wandering rather emptily through
Paulings, seeking what he might devour. He was hungry, poor spirit; he had eaten
nothing since he had left his own place at midnight and he had got lost in the fog all
morning. He had almost caught a small housemaid, but she had slipped away through
the efforts of her patron saint, sweet Millicent, and left him perfectly ravenous. It was
almost noon and devils are not built for fasting. Judge then his joy at coming, by pure
chance, upon this evil old man. He almost jumped out of his black fiendish skin for joy
to perceive the flashing violet light which surrounds, in the eyes of supernatural beings,
the head of a wicked man. He spotted it first from a corner of the hall where he had just
come out of a corridor. He rubbed his hands together and even flapped his clawed
wings in his excitement. He flew up to the Professor and began pouring all sorts of
excellent suggestions into his ear—his left ear.
Young McTaggart could play billiards ... the Professor had heard them say that ...
young McTaggart was probably proud of his billiards ... he could be got to go round the
table exhibiting his billiards. He would take off his coat before exhibiting his billiards.
And when the coat was once off, and its owner's eye was concentrated on the billiard
table ... oh, then!...
The Devil, who can see through walls, gently shepherded his pupil into the little
room next the library where the overflow of books was kept. That door, with horrid
smile, the old conspirator opened; and there, indeed, he found the youth, looking
miserably enough out of the window with his hands in his trousers pockets. He had
slunk into that inhospitable fireless den in order to be free for a while from the terrors of
high society.
"Ah, Mr. McTaggart, Mr. McTaggart, Mr. McTaggart!" carolled the scientist—and as
he said it he opened his arms wide in a most genial gesture. "I've been looking for you
everywhere!" There slyly wagging a knotted forefinger, "And I wonder if you can guess
why? Eh? Why? Guess why!" Which words said, and smiling still broader, he repeated
them once more three times, as was his wont, and then added: "I wonder whether you
can guess why, Mr. McTaggart, whether you can guess why ... whether you can guess
why?"
The Devil was now so happy that he could hardly refrain from manifesting himself,
which would have been fatal. He whisked all round the room, jeering at McTaggart.
Poor young Mr. McTaggart! He had been all night and all that morning a most
unhappy man. He exaggerated in his own mind the suspicions under which he lay. He
was too innocent to believe that he shared it with such exalted beings as the lord and
the Professor, of whom—though he had never heard his name—he was assured the
fame to be European, and who, anyhow, was connected by blood with a cabinet
minister.
The lad imagined himself watched by a thousand eyes. He dared not take his leave,
and yet he was in hell during those hours he passed at Paulings. He would have been
unhappy anyhow, for it was not his world; but to be within all that set and at the same
time a marked criminal—for that is what he felt himself to be—was almost intolerable.
How he had sprung up when the learned Ancient approached him, with those seeming
kindly eyes! Ah! had McTaggart enjoyed a few more years of human experience he
would have seen in those eyes such a mixture of cunning and evil joy as might have
put him on his guard. But no; he thought that in his loneliness he had found a friend.
Who knew?—perhaps a supporter.
The Professor's plan was simple, but McTaggart was simpler still.
Sudden interest in the game of Billiards
upon the
part of the Professor of Crystallography
to the University.
"Mr. McTaggart," said the Ancient, with horrible geniality, "I hear that you are
astonishing at billiards.... Billiards, billiards, yes, billiards.... Billiards. The Home
Secretary was telling me, Humphrey, I mean, my cousin, my cousin Humphrey ... the
Home Secretary, yes ... the Home Secretary was telling me that you were astonishing
at billiards. Now you know"—and here he went so far as to make a step sideways and
seize the young man by the arm—"it is the one thing I can watch for hours ... billiards ...
good billiards.... I have gone into the mechanics of the thing"—he was lying freely, and
gambling, rightly, on the idea that his companion could not distinguish between
Crystallography and any other science—"and it fascinates me ... fascinates me ... oh!
fascinates me. I wonder whether—" and in a fashion which would have been crude to
any other man, but to the lonely McTaggart was heavenly kindness, he urged with
linked arm and long sidling crablike step towards the billiard-room.
It was in the Professor's conception of things that when one is deceiving a fellow
being one must talk the whole time. He is not the only one to suffer from that delusion.
He talked all the way to the billiard-room; he talked while McTaggart was pulling off
the cloth; he talked while McTaggart was putting on the lights to see clearly on that dim
January day; he talked while McTaggart was chalking his cue and thoughtfully placing
the three balls in position.
The torrent of rapid words—all dealing with excellency at billiards, all squeaky—was
interrupted only at one moment. It was the moment when McTaggart did what he had
been expected to do—the moment when he took off his coat and threw it on the leather
cushions by the side of his newly-made and slightly eccentric friend.
The sight of that coat so thrown immediately by his side, and subject to his hand,
almost choked the senile conspirator with joy. But he recovered himself, and still
poured out a torrent of repeated words as the young fellow walked slowly round the
table, getting absorbed in a continuous break. The Professor interrupted that verbal
spate only now and then to gaze with a murderous keenness at a projected stroke and
to mutter "Marvellous!" two or three times; but all the while his heart was failing him. It
was not the only mean thing he had done in his life by a long chalk. He had spent the
whole of his life doing nothing but mean things; but it was the first actively and perhaps
dangerously wrong thing the old booby had ever dared to do: for he did not count the
Mullingar Diamond—that was in the cause of Science, and in the cause of Science you
can do anything.
But the Devil chose his moment for him; it was a moment of silence when young
McTaggart was waiting long and breathlessly to be certain of a stroke that would bring
his break over the hundred. His back was turned to the Professor; he was intent upon
his play.
The old bony hand, with the gesture of one that takes rather than gives, put the
emerald into a side pocket of the coat, where lay he knew not what—but in point of
fact, a tobacco pouch, a pipe, a pencil, and a piece of chocolate—of all things in the
world!—no longer clean. Nor had the Emerald ever been in such society before, from
the day when it had started life in the splendid court of Moscovy to these last evil days
of ours.
McTaggart had brought off his shot: his break was 102, and the spot and the red lay
perfect for a cannon and red in the pocket.
But you exaggerate the diplomatic value of the Professor if you think that he had
the wit to continue his stream of gabble after the deed was done.
It was lucky for him that he was dealing with the candour of youth, or that abrupt
retreat of his from the scene of his crime would have brought suspicion. For, his deed
accomplished, he simply got up with a jerk, dropped all attention to the play, looked at
his watch, muttered the time of day with an exclamation, and sidled out of the room,
leaving his companion marooned ... and with him, full of success, went the Lesser
Devil.
McTaggart could do without him; he went on playing for another ten minutes or so,
till the break ended, and had reached the pretty figure of 151. Then he in turn looked at
his watch in his waistcoat pocket, found it would be time for luncheon in a few minutes,
put up his cue, and sadly resumed his coat.
Had he been of those who smoke all day he would have pulled out his pipe, and ten
to one would have found the thing lurking there next his tobacco; but he thought of the
meal coming on, and much more did he think with dread that it would be breaking
some mysterious etiquette of country houses if he were to smoke a pipe. He would not
dare to do it till he saw some one of his betters at the same work. For the same reason,
after he had heard them going towards the dining-room and had joined them, he was
too nervous to put his hands in his pockets in a gesture of repose. He kept them
dangling in his extreme anxiety to commit no solecism. He moved nervously about
amid the sullen silence of the rest and wondered a little why the burst of geniality upon
the part of the man of gems should have dried up so suddenly. For not a word more did
the Professor speak to him; and all through luncheon McTaggart sat there in the same
terror and the same misfortune of soul, never daring to speak some artificial word
during the rare moments when anyone broke the silence.
They had not yet risen from table; he was still wondering what one did at the end of
luncheon in the houses of the great—at what point one got up, whether immediately
after one's host or simultaneously with one's host; whether the women went out first, as
he knew they did at dinner; whether it was his duty to open the door for them—when
Lord Galton pulled out his pipe, filled it deliberately enough, and lit it. After the easy
manners of our happy times he slowly and with deliberation blew a cloud of smoke
across the board which wreathed itself, not ungracefully, about the venerable head of
Aunt Amelia. So natural an action was followed by his host, who in turn thoughtfully
pulled out his own pipe and lit it, as he rose to fetch himself wine: he mixed tobacco
and wine, did Humphrey de Bohun.
"Then," thought McTaggart to himself, in an agony of desire for tobacco, "it seems
this kind of thing can be done,"—and he felt for his pipe, and pulled out his pouch.
Mr. McTaggart discovers the Emerald.
Now there happened to be in the room at that moment an Angel. He had come to
Paulings express to counteract the Devil who had been putting in such strong work on
the Professor, and the Angel saved the quill driver, whom, for his poverty, he loved. For
that innocent, finding something that felt like his slab of chocolate in among his
tobacco, and knowing himself to be well capable of having put it there, was just about
to pull it out, and was already speculating on what sort of flavour chocolate gave to
Bondman—or Bondman to chocolate—when the Angel seized his wrist and pinned it.
He did not know the Angel was doing this—we never know our luck—he could not have
told you what happened, except that he hesitated, and being of the opposite sex, was
not lost. But for the Angel, he would have pulled out the thing before them all, and said,
"Hallo, what's this?" and there would have been an end of McTaggart. Instead of which
the Angel, with angelic swiftness, put a thought into his head.
"Don't pull out that lump of chocolate! It will make you look a fool. The great don't
eat chocolate, except out of large expensive wooden boxes with Japanese pictures
outside; elaborate boxes. The rich do not carry half-broken slabs of chocolate in their
pockets—still less in their tobacco pouches!"
Therefore was it that McTaggart did not take out the lump, whatever it was; he
grasped a fingerful of tobacco and peered down with one eye into the recesses of the
pouch. When he saw what was there, his heart stopped beating! For a moment he felt
faint and giddy.... But the angel firmly put the pouch back again, leaving the tobacco in
his fingers, and with shaking hand he filled his pipe, and with shaking hand he lit it!
What the devil?
How on earth ...?
The unfortunate boy actually examined his own mind to see whether he could
possibly have done such a thing, and then forgotten it—have done it inadvertently.
Then he thought it had fallen into his coat when Marjorie had let it drop. Then he
remembered that he had not been wearing that coat, that he had been in evening
dress. Then he thought that the universe was made in some way that he did not
understand. He looked at his coat, and fingered it. It was all right. His mind would not
work properly again until he had satisfied himself beyond a doubt not once, but many
times. He allowed—through terror—too long a time to pass lest he should seem in
haste; strolled, looking as careless as he could, towards the library, looked round to
make sure that no one had noticed him, leaped upstairs to his room, locked the door,
took out his pouch and that which was within. He gazed at it for something like half a
minute, putting it down on his dressing-table in the strong light to make sure.
There was no doubt at all. Either he was mad, or that was the emerald. He
remembered some odiously vivid dreams that he had had as a child during the air raids
—but he was certain this was no dream. He was McTaggart all right, a miserable young
journalist against whom fate had woven some hellish plot; and there was the Emerald.
Next he tortured himself as to what he should do; obviously he must keep it upon
him; he dared not secrete it anywhere. If one secretes things one can be traced.
Conscience for one moment bade him go and tell his host, and risk all; but
unfortunately the Angel had been called away at that very moment to tackle the Devil
again, who had settled in the Vicarage; and in lack of such heavenly aid McTaggart fell,
as any one of us would have fallen. He put the emerald into the inner pocket of his
coat, pinned three pins round it carefully to make certain that it should not escape; and
then went down with leaden heart to mix with his fellow beings and to trust to time.
CHAPTER SIX
he boy Ethelbert was suffering; not from contrition—which, I need hardly

tell one of your learning, is the pure sorrow for sin—but from attrition—
which, I need hardly tell one of your learning, is the sorrow for sin only in
so far as one considers its unpleasant consequences to oneself.
The boy Ethelbert clearly appreciated that in attempting to save
himself from one danger he had run himself into another far greater. He had put a
valuable jewel into a nobleman's pocket and that might be, in legal terms, for all he
knew, embezzlement, malversation or even a compound and chronic felony of malice
prepense; perhaps a misdemeanour—with which word he was familiar through the fate
of an uncle of his called John.
He was in great agony, was the boy Ethelbert; in agony of that sort which youth
cannot endure until it has relieved itself by communion. But how should he speak? His
duty was to his natural lord, the Butler. The glorious, the remote Mr. Whaley: God of the
Underworld. Should he confess to the Butler? It would be madness. Yet he must speak:
he must unburden his mind.
The innocent child was not long in finding a plan. He would go to his true superior
and, naming no names, mentioning no-one-like, he would give a nod as good as a wink
to a blind horse, and them as understood could follow if they chose, and if they asked
no questions they wouldn't be told no lies. And mum's the word. Such, in rapid
succession, were the Napoleonic thoughts of Ethelbert.
It was shortly after luncheon that he sought the room in which the dignified O.C. of
the household of Paulings was wont to repose from his labours: and never more
thoroughly than after luncheon.
Midday sleep is unknown to the young, at least after they are very, very young.
Those of young Ethelbert's age have no use for it and cannot understand what a boon
it may be to others. Foolishly, therefore, did young Ethelbert knock at the door of the
holy of holies, thereby suddenly awakening the sacred being within, who jerked into a
startled gasp. He pulled a handkerchief from his face, thought for a moment that the
house was on fire, expected to see an angry master perhaps; was on his feet with
labouring breath, purple, expectant; when there entered the Boy.
A fine and hearty curse greeted the youth and almost blasted him from the room,
but what he had to say was of such moment that he just stood his ground.
"Oh, sir!" he said, "I thought I'd come and tell you..."
"Come and tell me what? You young devil!" roared Mr. Whaley with a lack of dignity
which I should have thought impossible had I not myself once spied upon him in his
more relaxed moments, when he thought that none could observe. "I've a mind to have
you larroped! Damned if I don't larrop you myself!" He made a vicious dash at the Boy,
who was only spurred by such terror to the arresting cry of.
"Ho, sir! The Hemerald....!"
"The Emerald ..." gulped Mr. Whaley in a very changed tone. And then, almost
meekly: "Well, what about the Emerald, young Bert? What about it?" The fierceness
had gone out of him altogether; he sat down. "Anyone been saying who took it?" For
conscience that makes cowards of us all makes us most cowardly when we are
innocent—especially in a trade with perquisites.
Ethelbert recovered some little of his composure, and there came into his eyes a
look of simple cunning.
"There's some," he said, nodding mysteriously, "what might speak if they chose."
"Oh! Is there?" said Mr. Whaley. "Well then, speak, you little rat!"
"I didn't say it was me as knew," answered Ethelbert a little plaintively. "But don't
you think, sir, that when the clothes are brushed and all, him as brushes finds out
what's in the pockets—yes" (mysteriously) "even in them of the 'ighest?"
"'Oo'd be fool enough to leave such a thing in their pocket?" said Mr. Whaley
contemptuously. "And 'oo do you mean by the 'ighest?"
Ethelbert nodded with a superior air.
"Ah!" he answered doggedly, "all I said was, 'there's some could speak if they
chose.' And there's things that may be left in the pockets even of the 'ighest."
"Look 'ere, young Bert," said Mr. Whaley, rising again ponderously, and with a new
threat in his face: "I'm not going to have any of that." Then shaking a considerable
sausage of a forefinger at the lad, he added, "When you say 'the 'ighest' that's enough!
Don't let me 'ear you speak again: leastways not on jewels and such like. There's only
one name that it can mean you're driving at"—and there rose up within his mind the
majesty of the master, Humphrey de Bohun.
"I'm driving at no one," said the Boy, struck suddenly again with terror. He had not
dreamed that the upper servants felt so strongly upon the immunity of lords such as he
in whose pocket the gem, to Ethelbert's certain knowledge, reposed—for he had put it
there.
"You've been a-brushing the clothes, young lad, have yer? Yes, of course you have;
that's your place; and setting 'em out as they should be set. And you say you found
something in the pocket of the 'ighest, did you?"
"I never ..." began Ethelbert, almost on the point of howling.
"You shut your dangerous young mouth," shouted Mr. Whaley. "It's talking like that
against your betters as 'as put many and many a lad in prison."
"Oh, sir!" said the unfortunate Bert.
"Now look here, my Boy," went on Mr. Whaley, in his heaviest manner, slowly
transforming himself into the distant Superior and pronouncing divine moral judgment
and guidance, as it were, for the very young. "You listen to me, and listen solemn. This
may be a turning point in your life, it may. Talk like this among the lower servants, let
alone a little bastard not yet sixteen, 'as been the ruin of some—aye, of many. So I tell
ye. The gaols are full of 'em. Now, you mark what I say, young Ethelbert"—it was the
first time he had ever used the entire name, but the occasion demanded it—"one word
from your lips, and you're ruined. It's well you come to one like me, that might be your
father like, and that has a care for your future, my lad. Remember that! One word from
your lips, and you're ruined. It's not for you to be piecing this and that together.
Gentlemen 'ave got ways o' their own, and, anyhow, I'm slow to believe you. There
may be a game about all this, and, anyhow, not a word from your lips. Mark, my lad!"
he went on, his voice booming, "ye're lost if ye speak. Have you taken that?" he ended,
almost shouting again.
"Oh, yes, sir!" said the miserable Ethelbert, trembling. "Oh, sir, I meant no harm...."
"Well, then, you go and do no harm," concluded Mr. Whaley, and waved the infant
away.
* * * * * * *
Mr. Whaley rose to his full height and girth and stretched. He looked in a little
square looking-glass, one of his necessaries of life, thought his tie doubtful, carefully
and gingerly put on a new one, worthy of the occasion. His boots—he glanced down at
them—yes, his boots would do. His trousers were just what they should be. The fringe
of hair round the majestic dome of his head never needed attention less than now.
It was a solemn moment in history. He, George Whaley, a man of weight and years,
possessed, moreover, now of a sufficient competence, but not undesirous of making it
larger still, was in possession of the dread secret. The head of the de Bohuns, one of
His Majesty's principal Secretaries of State, had fallen, fallen, fallen! Humphrey de
Bohun had pinched his own daughter's emerald. The Emerald of Catherine the Great.
The fortune of the de Bohuns lay concealed by his master's hand, awaiting the
receiver's gold. Oh, horror! In what embarrassment the unfortunate man had committed
the fatal act Mr. Whaley knew not: could so good a man have been blackmailed by
scoundrels? Why should he need money—and money at such risk? Alas! who can
plumb the depths of the human heart? thought George Whaley—indeed, he almost
spoke the words aloud, so apposite did they seem, and so often had he read them in
his book of devotions. Yet was it so! And ever, in the least expected places, thought
George Whaley again, lies the solution of a mystery. He shot his cuffs, drew himself up,
coughed a little, and rehearsed the scene.
"I beg your pardon, sir, may I have the honour of a moment's confidential word with
you?" And then another discreet cough.
Then how to put it? He thought long and deeply. He must put it with sympathy—
almost as a friend. He must not forget that he was talking to a superior. It would need
very skilful handling; but what are butlers for if they cannot skilfully handle? It is the
very core of buttling!
He had handled other situations in his other situations, had Mr. Whaley: none quite
so delicate as this, but still, some of 'em pretty delicate. Yes; he must talk to Humphrey
as a friend. Respectfully, but as a friend: and above all firmly. It was clear that such a
service would merit some reward.
God knows, there would be no tone of menace! Oh, no! Whatever honorarium
might accrue to George Whaley as a reward for such revelation should be the gift of a
grateful heart alone: and, said Mr. George Whaley to his own conscience, why not? He
would be doing his master a very great service. Indeed, he would be doing a double
service—nay, a treble one. For he would be rescuing the Home Secretary of England
from his lower self; that was a moral service. He would be preventing him from
inevitable discovery; that was a material service. He would be serving him faithfully as
an honest domestic should; and that was a service of loyalty.
Was it to be wondered at (the whole scene rose vividly before his eyes as it was to
be—as it certainly would be), was it to be wondered at that the grateful man should, on
an impulse, seize the honest servitor's hand, grasp it warmly, and then, with a catch in
his voice, cry aloud, "Whaley, you have served me well!" The rest would follow. Not
less, he took it, than five hundred pounds.
Should he go further? Should he offer his services for taking back the gem
discreetly and seeing that it should be laid, through means he could command, upon
the dressing-table of the culprit's daughter—no one should know whence?
Time must show; the opportunity would develop; the details of the drama would be
filled in. But the main lines were clear. George Whaley would save the head of the
family of de Bohun; he would save the soul—and, incidentally, the more earthly
reputation—of the head of the family of de Bohun. He would receive the little
spontaneous, heartfelt reward due to so honest a liegeman of the de Bohuns. Ah!
Chivalry was not dead....
But nothing must be done on impulse. He glanced at his watch. It was only just past
three. He must watch the poor tortured soul until there had developed in it, as inevitably
there would through the effect of time, a false security—a false security brought by
suspicions and counter-suspicions among the guests, who could never dream the real
truth. Upon such a mood the revelation would fall with tenfold effect.
Then, and then only—he would watch his moment—would George Whaley
unburden himself of the curse of the de Bohuns and turn that curse into a blessing;
moral to his master, and to himself material.
Such was the plan of George Whaley. Once more he recited, but in an undertone, a
whisper, the words of which could not be heard by another, the very phrases he was to
use, the gestures proper to the great moment when it should come. So discreetly did
he rehearse that young Ethelbert without, his ear glued to the keyhole, heard nothing
but a murmur of monologue within, and feared in one wild moment that the awful
revelation about Lord Galton had driven the butler mad.
CHAPTER SEVEN
arjorie had insisted upon seeing her father alone, and she had worked it
easily enough.
The Professor in his relief from the accursed emerald had fallen into
a sprightly mood. He had compelled young Galton to take a second
walk, and therein had bored the turfist to agonies; which only shows
that God is just, and that we are punished in that by which we sinned; in Galton's case,
the avenue. During that walk the crystallographist volubly explained his exciting
experiences in the past as an amateur detective. His large prattling mouth discoursed
of marvellous sleuth-deeds in the past. But he did not go too far. He said nothing of
emeralds. He kept the tit-bit, the great revelation, for his host—and he knew at what
time to deliver it.
As for McTaggart, there was no difficulty in getting rid of him. All he desired was to
be alone. He wandered off all solitary. Victoria Mosel, left with no one but Aunt Amelia,
fled; and Aunt Amelia, once in her chair, was safe to remain there for the rest of the
afternoon. Therefore was Marjorie safe to tell her father what should be done.
Her temper was at breaking point; she was in that mood when women will blame
whatever is nearest at hand and most defenseless; and what more admirable butt than
a widowed parent?
"Papa," she said, "there's only one thing to be done. You must get a detective! At
once!"
"My dear child! My dear child!" said the shocked politician, all the traditions of the
de Bohuns rising in his blood, "a detective at Paulings!"
"Oh, stuff and nonsense!" said the dutiful daughter. "I'm sick of all that. Considering
the kind of people you do have in Paulings—gaol birds like Tommy, and that damned
old fool Cousin Bill, who steals diamonds ..."
"Hush! My dear, hush!" begged the appalled and terrified Home Secretary. He had
noticed an open door, and hurriedly shut it. "Besides which, apart from being
overheard, really, one must not say such things!"
"Say what?" retorted Marjorie sharply. "Oh, papa, for Heaven's sake don't talk any
more nonsense, but do get that detective!"
"I can hardly telephone on such a thing as that," hesitated the poor man weakly.
"Everything I say over the telephone is known at the exchange. And we know what
happened that time when they were paid by The Howl. As for letting one of the
servants do it ..."
"Oh! Good heavens, papa!" said Marjorie. "Isn't there a car? Go up in the car! Tell
Morden all about it."
"Morden can hold his tongue," mused de Bohun thoughtfully.
"Of course he can!" snapped Marjorie.
"But ..." hesitated her father, again, "I don't see how ... what with the guests ... and I
wouldn't have them suspect for worlds...."
And as he said this he saw out of the corner of his eye his two cousins coming back
towards the house, close at hand; the elder one was gesticulating in fine fury in his
new-found happiness, and the other paced sombrely fierce at the end of his torture.
Before they could open the front door ...
"Oh, damn!" said Marjorie—and she nearly added "you." "I'll telephone to you from
my room. I'll give you an excuse to say the Home Office is calling." And she flew
upstairs.
She was safely at her telephone before the two cousins had passed the front door.
She gave them time to get into her father's presence, or for her to guess, at any rate,
that one of them would be in the library. Then, with the promptitude of the young and
the modern, she did the trick. The basement had put her through, and the bell on the
big desk rang smartly. Galton and the Professor, sitting there in the room with the
Home Secretary, looked up as quickly as did their host. He was on the receiver with a
nervous rapidity; and the conversation was of a simple sort which I almost blush to
recall.
"Now, papa, just tell them you've got to go to town because there is a hurried
summons in London. Tell them you'll be back in a couple of hours."
"Who's on?" said Lord Galton.
"Yes! Yes!" said de Bohun. "All right! Yes! The Home Office? Ah! Yes? Tell me the
details," knitting his brows a little; then turning to his two cousins, "It seems they want
me at Whitehall."
The Telephone: "Hurry up, papa; it's all got to be fitted in pretty damn close, you
know; they've got to get the man, and he's got to be got here by this afternoon, and got
somehow!"
The Home Secretary: "Ah? Yes!" Frowning, "Oh! that's serious—well! You want me
at once? All right! It's Saturday afternoon you know! Is Morden there? Tell him I'll be up
within the hour." Then he turned to his guests. "Yes, they want me at once, it seems.
Most urgent. But they say it won't take long." He spoke into the receiver in his turn: "Do
you think I can get back here by five or a little after in the car? ... Yes," turning round
and nodding at his guests thoughtfully, "they say I can get back by five—or a little after,
in the car. What a business it is! I have often wondered," he added sententiously as he
hung up the receiver on its hook and rang the bell to order the car—"I have often
wondered what makes men take office. It's a tradition," he sighed, "Some one must
serve the State! But it's a weary business." All this for the benefit of his two cousins, as
though they had been a public meeting. "I'll get back at once; my man can do it in forty
minutes from here if he takes the cut by Muffler's Lane, and there's not much traffic
after the first two hours of a Saturday afternoon."
The car was round promptly enough. It was stopped within five miles for the great
man to telephone back—from a local box—to Paulings for something he had forgotten
to leave word of. But he did not telephone to Paulings. He telephoned to the Home
Office, of which he was the chief. To such abasement do modern contrivances drive us.
He called up the invaluable Morden and discovered to his enormous relief that the
invaluable Morden, though it was a Saturday and already a quarter to four, was working
away.
Within twenty minutes more the great statesman was in his official palace of
Whitehall. Morden was there all right, as the telephone had told him. Morden was
there! Oh invaluable Morden! have you not earned those directorships and that
sinecure in the Engrossing Department? By God! you have.
"Morden," said the Home Secretary.
"Aye, aye," answered Mr. Morden wittily.
"You know Scotland Yard?"
Morden did not turn a hair. Did he know Scotland Yard? Did he? He, Morden of the
Home Office! The man who laid the traps for the scapegoats ... the man who worked
the parks.
So young—not forty—he had already seen pass before him a long troop of
politicians, and he was ready to take any folly from them, short of physical violence. So
when he was asked whether he, the junior brain of the Home Office, knew the place
and institution called Scotland Yard, he said that he did; and he said it as naturally as
though he had been asked for some information on Thibet.
"Now who do you think," said the Home Secretary musingly, as he rose from his
chair and paced up and down the enormous room, his brows tortured with deep
thought—"who do you think there would be—connected with Scotland Yard, mind you!
—who would undertake a private inquiry, and be rigidly secret?"
"They are all rigidly secret," said Morden simply.
The Home Secretary wagged his long head with a weary simulation of cunning, and
a would-be sly smile illuminated—or at least undimmed—his eye.
"That's all right for the public, Morden," he said. "But you'll see what I mean in a
moment. Could they find some one even more rigidly secret than the rest? Eh?"
"I could," said Morden. "I can tell you his name. A man called Brailton, close over
sixty, but very good indeed. He was the man we used when there was that trouble
about the death in Lady Matcham's house just before her administration went out of
office."
"Oh, was he?" cried the Home Secretary eagerly. "Was he?" Then with great
satisfaction in his voice: "In that case he is all right. It was certainly astonishing, the
way that was kept back....You see, Morden, it's something of the same case here. The
trouble is in my own house ... Paulings."
For once Morden was genuinely taken aback. He was silent. "I see," he at last
murmured gravely. "Your house—and the safe side?—Of course!"
"It's in my own house—and the safe side? Good God, yes!" The Home Secretary
spoke firmly. Then after a pause he added, "When they find out who has done it ..."
"Done what?" said Morden.
"Never mind," answered his courteous chief. "You're bound to know all about it in
good time. Well, as I was saying, when they know who's done it, it might turn out to be
some one of whom not a soul in the Press must know that he has done it. I mean, if he
has done it, nobody must know that it was he who did it, outside the few who know that
he has. Have I made myself quite, quite clear?" he asked anxiously.
"Perfectly," said Morden.
"Now this man Brailton. When could he get down to Paulings?"
"He could come at an hour's notice," said Morden. "He got back from Yorkshire last
night, and he's got nothing on for the moment."
"Ring him up," said the Home Secretary.
It was at six removes, and took just over ten minutes. The man in the outer room
rang up the department, which told the section, which sent for the controller, who gave
the order to the third floor, which got hold of the group, and the group had the good
fortune to find Brailton at the end of a wire. Brailton would take whatever train he was
told, and was waiting.
The Home Secretary meditated.
"I am going down by car now," he said. He looked at his watch. "It takes well under
the hour by train—it's not seventeen miles. I shall be home by half past five, and I'll tell
Marjorie. The best train is the six-thirty from St. Pancras. It gets down in forty minutes.
I'll have him met and brought straight to Paulings. He'd be in time for dinner.... By the
way," he added suddenly, as a thought struck him, "he'll be all right, will he? Go down?"
"Perfectly," said Morden eagerly. "Perfectly."
"No one'll suspect anything?" persisted his chief anxiously.
"Oh, no, no, no!" assured Morden airily. "I know the man like an uncle. Quiet, silver,
rather too refined, silent, tall. Dresses—if anything—a little too carefully. At Lady
Matcham's he passed for a Don working in Egypt who hadn't come to London for
months. And in this last Yorkshire case he passed as a Times correspondent just back
in England from the east after some years. All you have to do is to make up good
reasons for people not having seen him before. He passes perfectly."
"The accent?" said the Home Secretary, knitting his brows again. "Is—well—you
know what I mean?"
"Oh, perfectly. It's beautiful; it's remarkably smooth—yet not conspicuous," said
Morden. Then, "You knew old Dickie Hafton?" he added suddenly.
"Of course I knew old Dickie Hafton!" answered the indignant Home Secretary. "He
was my mother-in-law's first cousin—went to the Lords in 1895 and to the Lord in 1910.
Fond o' women." And there rose before his mental eye the image of that aged peer,
thin, aquiline, too proud, too careful of his dress, a man of exquisite voice a trifle thin in
tone, but how precise! with the old, not uncharming habit of a few French words here
and there. A public figure to the last, famous for his activities in the evangelical world.
"Well," answered Morden, "old Brailton's the startling image of Dickie Hafton. You'll
like him. He goes down."
"All right," said the Home Secretary, hugely satisfied. "That's settled! I'm off; I leave
it to you to make arrangements. The six-thirty."
But to make his chief quite at ease, Morden whispered something in his ear.
"Really?" said the Home Secretary, as he struggled into his coat—and he said it
very loudly, so that everyone could hear it in the next room, to Morden's horror. "Not old
Dickie's son? There wouldn't be time for it!"
Morden nodded mysteriously, and whispered again: "Yes, there is! He was only
eighteen.... It was the housemaid at his grandmother's." And the Home Secretary went
out bemused and marvelling at the strange revelations of this pur world.
CHAPTER EIGHT

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Taxation: Philosophical Perspectives

Ibsen's Hedda Gabler: philosophical perspectives

The Movement for Black Lives: Philosophical

Bad Words: Philosophical Perspectives On Slurs David

Peace and War: Historical, Philosophical, and

Strategic Taxation: Fiscal Capacity and Accountability

Music, Leisure, Education: Historical and Philosophical

The Poetry of Emily Dickinson: Philosophical

The Oedipus Plays of Sophocles: Philosophical

This series is a new forum for collective philosophical engagement with

List of Figures, Table, and Box ix

Part I. On the Tax System: Normative

Part II. Tax Policy and Forms of Taxation:

10. The Politics of Land Value Taxation 185

Index of Names 245

List of Figures, Table, and Box

L AURA B IRON studied Philosophy at Queens’ College, Cambridge, and at Harvard on

xii NOTES ON CONTRIBUTORS

M ARC F LEURBAEY is Robert E. Kuenne Professor in Economics and Humanistic

NOTES ON CONTRIBUTORS xiii

S HEPLEY O RR is Lecturer in the Department of Civil, Environmental & Geomatic

B ERTIL T UNGODDEN is Professor in Economics at the Department of Economics,

xiv NOTES ON CONTRIBUTORS

P ETER V ALLENTYNE is Florence G. Kline Professor of Philosophy at the University of

 MARTIN O ’ NEILL AND SHEPLEY ORR

market-mimicking mechanism designed to charge people for beneﬁts received, we

 MARTIN O ’ NEILL AND SHEPLEY ORR

Part I. On the Tax System: Normative

 MARTIN O ’ NEILL AND SHEPLEY ORR

 MARTIN O ’ NEILL AND SHEPLEY ORR

of the hard-working. Picking up a theme in Alan Hamlin’s discussion of the non-

 MARTIN O ’ NEILL AND SHEPLEY ORR

Part II. Tax Policy and Forms of Taxation:

 MARTIN O ’ NEILL AND SHEPLEY ORR

 MARTIN O ’ NEILL AND SHEPLEY ORR

WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 

1.2 The Optimal Tax Approach

WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 

modelled as choosing a tax/beneﬁt system to maximize a value function subject to the

underlying characteristics of individual agents and speciﬁcs of economic activity that

WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 

the prevailing literature which operated on the normative basis of a number of

an explicit normative value function is set in the context of relevant feasibility

¹³ For a discussion of the consequentialism/deontology distinction in the context of taxation, see

WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 

1.3 The Political Economy Approach

WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 

rationally in pursuit of their self-interest. A benchmark case in this literature is the

WHAT POLITICAL PHILOSOPHY SHOULD LEARN FROM ECONOMICS 

1.4 The Tax Constitution Approach

"Oh! Baleful, hellish light, thus to suffuse

as Milton has it in the matter of the fish-god, Dagon.

he boy Ethelbert was suffering; not from contrition—which, I need hardly

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