Coordination Failure

In the 1930s, American government began to transform in a way that its Founders simply could not foresee. The public sector grew exponentially, creating a demand for revenue across national, state, and local levels. The absence of provisions in the U.S. Constitution for fiscal coordination meant that, much to the dismay of policy experts, the country developed a complex and incoherent multi-level structure of taxation. Today, highly variant state tax policies are a core driver of economic competition and political warfare between the states. Moving back and forth between statehouses and Washington, D.C., Coordination Failure examines key moments (the 1930s, 1960s, 1980s, and 2010s) in which major changes in state-level tax policy occurred alongside debates over intergovernmental relations. Adam Myers analyses failed efforts at federal-state tax coordination policy in the 1930s and the debate over, and eventual passage of, fiscal federalism reform in the 1960s-1970s, before turning to the present, when state tax policy is subject to partisanship for the first time in modern American history. The book's key contribution is in showing how, throughout the past 95 years, state and national tax policy decisions have influenced each other in an iterative fashion. At a deeper level, Myers provides an answer to the question of why and how the U.S. established a dramatically different form of fiscal federalism from that which exists in the world's other federal democracies.