Duggan, Michael --- "Contemporary US tax policy by C Steuerle (Washington DC: Urban Institute Press, 2004) (book review)" [2006] JlATax 5; (2006) 9(2) Journal of Australian Taxation 173

• BOOK REVIEW

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BOOK REVIEW

Contemporary US Tax Policy by C Steuerle

(Washington DC: Urban Institute Press, 2004)

pages i–xiii, 1–322. ISBN 0 87 766720 9.

Contemporary US Tax Policy by C Steuerle undertakes an analysis of developments in United States’ (‘US’) tax policy since the Second World War. The book will appeal to a broad spectrum of people, from the general reader who is interested in taxation and public policy through to taxation practitioners and those involved in the development of taxation policy.

It provides an excellent overview of the basic principles of public finance and taxation: equity, efficiency, simplicity and the goal of revenue raising. It also looks at the roles of the various stakeholders in the development of tax policy.

In his analysis, Dr Steuerle not only provides a wealth of knowledge of the US taxation system, but also some unique insights into the development of taxation policy in practice, no doubt gained from his experience in senior positions within the US Treasury.

The book traces developments in the US tax system from the Second World War, identifying the pressures on the system and consequent policy responses to these changes. While the details of this progress would be familiar to American readers, they should also be of interest to readers from other tax jurisdictions, given the importance of the US economy, similarity of tax issues and international cross-fertilisation in the development of tax policy.

The author makes a number of conclusions and recommendations about tax policy. Some of these are specific to the idiosyncrasies of the US tax system, while others are equally relevant to most other jurisdictions. He recognises the importance and nature of the taxation system (describing it as a labyrinth of principles inseparable from the budget process, and which affect every sphere of life) and points out that tax policy is a primary tool used by governments to change taxpayer behaviour. Tax funds most of the government’s services, and one-third to one-half of all government subsidies are drawn from tax concessions.

The massive problems facing the US tax system are acknowledged. It is inefficient and in many ways, inequitable. As with a democratic society generally, the tax system is prone to waste, bureaucracy, cronyism and sometimes hardcore corruption. Many problems with the tax system are not anticipated when legislation is originally introduced, and so are not avoided in the first place.

However, Dr Steuerle’s message is basically optimistic. He argues that the problems confronting the US tax system can be overcome if they are met head on. He points to the resiliency of the US democratic process and holds that while the history of taxation is one of failures in tax policy, it is also a history of hope. When the political system gets entirely out of whack, the political system also responds. He believes that government can contain the demands of special interests when they are excessive, if they stop appeasing them at every turn and if they boost the influence of agencies set up to serve the broad public interest.

The book is well indexed and contains excellent citations and notes, which will allow interested readers to further pursue the arguments that Dr Steuerle presents.

Michael Duggan^[∗]

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^[∗] Analyst, Commonwealth Treasury.