State Tax Policy: A Political Perspective

DAVID BRUNORI, State Tax Policy: A Political Perspective, Second Edition (Washington D.C.: The Urban Institute Press, 2005, pp. 148, $26.50).

This book is intended to be a primer on the critical tax policy issues that face state governments and policymakers. The author not only discusses the problems posed by various tax issues, but also provides potential solutions that state lawmakers can implement to mitigate those problems.

The book is divided into ten chapters. Chapters 1 to 4 provide the background and framework for evaluating state tax policy. Specifically, they discuss, in turn, the importance of state taxation, the principles of sound tax policy, interstate competition for economic development, and the politics of state taxation. Chapters 5 to 7 focus on the three main state taxes-sales and use taxes, personal income taxes, and corporate income taxes-and form the core of the book. Chapters 8 and 9 discuss other state taxes and other sources of state revenue. Chapter 10 ends with specific policy recommendations for state policymakers.

In Chapter 1 the author makes the case for the importance of state taxation and the challenges facing today's state tax systems. These challenges arise from the increasing devolution of responsibility to state governments, the politics of anti-taxation, and the concern with economic development. The author argues that despite these political and economic pressures, the fundamental purpose of state tax systems-that of being able to generate the revenues to provide the services required-has not changed. Chapter 2 discusses "classic tax policy"-the basic principles of fairness, efficiency, stability, and accountability-that have been long advocated as...