Deficits, Debt, and the New Politics of Tax Policy

The Constitution grants Congress the power 'to lay and collect taxes, duties, imposts and excises'. From the First Congress until today, conflicts over the size, role and taxing power of government have been at the heart of national politics. This book provides a comprehensive historical account of US tax policy that emphasizes the relationship between taxes and other budget components. It explains how wars, changing conceptions of the domestic role of government, and beliefs about deficits and debt have shaped the modern tax system. The contemporary focus of this book is the partisan battle over budget policy that began in the 1960s and triggered the disconnect between taxes and spending that has plagued the budget ever since. With the US government now facing its most serious deficit and debt challenge in the modern era, partisan debate over taxation is almost completely divorced from fiscal realities. "The United States faces a predictable fiscal crisis of unprecedented magnitude, but democratic institutions and processes are standing in the way of confronting painful choices and making responsible fiscal policy. Dennis Ippolito's book is a comprehensive and authoritative treatment of how the world's leading democracy got to this impasse. It is fair-minded and even-handed about issues that are deeply divisive in a polarized political system. It is essential background reading for understanding the fiscal crisis in the United States." - William R. Keech, Duke University "One of the foremost analysts of U.S. budget policy offers a new and insightful perspective on how spending, deficits, and debt have influenced governmental decision making on revenue levels and structural taxation. Dennis Ippolito's erudite but accessible study has immense value for scholars, policy makers, and concerned citizens seeking to understand how the U.S. fiscal state developed in the twentieth century and how it can come to terms with its problematic twenty-first-century future." - Iwan Morgan, University College London "In this remarkably well-written and researched book, Dennis Ippolito expertly explores our nation's tax and spending decisions from colonial America through the New Deal, from Reagan to Obama. He carefully analyzes the difficult choices our political leaders now face if they want to bring the government's budgets back into balance. This is economic policy analysis and history at its best!" - James D. Savage, University of Virginia1. A brief history of federal taxation; 2. The stable era - World War II to the 1960s; 3. Destabilizing tax policy - Vietnam and the 1970s; 4. The Reagan strategy - balancing low; 5. The Clinton strategy - balancing high; 6. Bush, Obama, and fiscal deadlock; 7. Reconnecting taxes and budgets.