War and Taxes.

• Author: Mehrotra, Ajay K.
• Position: Book review

WAR AND TAXES. By Steven A. Bank, Kirk J. Stark, and Joseph J. Thorndike. Washington, D.C.: Urban Institute Press. 2008. Pp. xix, 224. $26.50.

INTRODUCTION

In the spring of 2003, Congress was in the midst of drafting a new tax bill. Two years earlier, the Bush Administration and congressional leaders had initiated a tax-cutting agenda by slashing individual income tax rates and reducing wealth-transfer taxes. (1) The 2003 bill was an attempt to continue the assault on the nation's progressive tax structure, just as the budget deficit was spiraling out of control. (2) Meanwhile, the "war on terror" was in full swing. By the end of April 2003, well over 135,000 U.S. troops were deployed in Afghanistan and Iraq, and military spending was escalating at an alarming rate. (3) The continued commitment to tax cuts during wartime seemed incongruous. How could lawmakers consider tax cuts, aimed mainly at the wealthy, at a time when many ordinary Americans were sacrificing life and limb overseas? To explain the apparent dissonance, then-House Majority Leader Tom DeLay (R-TX) boldly declared that, "Nothing is more important in the face of a war than cutting taxes." (4)

DeLay's remark was not mere political rhetoric. Just one month later, he followed through by joining his fellow House Republicans in passing a package of tax cuts that the Congressional Budget Office estimated would drain nearly $61 billion from the federal treasury in 2003 alone. (5) But this was only the beginning. From 2004 through 2006, the Bush White House and its congressional allies enacted a series of additional tax cuts as part of several broader, economic measures. (6) Though these cuts were more modest than those enacted in 2001 and 2003, they came as the human and financial costs from the war on terror continued to mount. Commentators and critics questioned how American politicians could consistently ignore the obvious links between foreign policy and domestic tax law: how could our ostensible leaders neglect the American tradition of shared wartime sacrifice? (7)

To be sure, lawmakers have not always been so oblivious to the price of conflict and the obligations of wartime fiscal citizenship. Throughout American history most political leaders have recognized that wars entail sacrifices on the home front as well as the battlefield. Indeed, just a few decades ago, DeLay's 2003 words and deeds would have been unimaginable. In the 1960s, back when military hawks were also deficit hawks, few leaders would have been able to justify tax cuts during wartime. As one Republican lawmaker succinctly explained during the height of the Vietnam conflict, "I just don't see how we can be hawks on the war and then vote against taxes to pay for it." (8)

The contrast between recent and historical wartime tax policy is the subject of War and Taxes, the provocative and fascinating new book by tax scholars Steven A. Bank, (9) Kirk J. Stark, (10) and Joseph J. Thorndike. (11) Using this contrast as their point of departure, the authors take on the important and timely question of whether there is any precedent in U.S. history for cutting taxes in the midst of war. Synthesizing earlier historical scholarship, the authors provide a rich and thorough reinterpretation of the varying social, political, and economic conditions that have animated fiscal policymaking during nearly every major U.S. conflict from the American Revolution to the two world wars and up to the present war on terror. Mining the lessons of the past, their goal is to make readers aware of the complex and challenging circumstances that have prompted wartime American leaders to enact tax hikes.

Although War and Taxes was written in the waning years of the Bush Administration, its research focus and historical findings remain salient. The recent economic downturn and the Obama Administration's differing approach to the conflicts in Iraq and Afghanistan have certainly changed the calculus of wartime tax policy, but the long-term effects of the Bush Administration's deficit-inducing tax cuts and war expenditures will be felt for many years to come. (12) Even more significant, the historical links between wartime taxation and fiscal citizenship have not only shaped the history of the modern American state; they are sure to influence future political and economic developments.

The authors of War and Taxes, of course, are not the first to investigate the historical relationship between wars and taxes. Scholars have long identified national conflicts as the crucial catalysts in the creation of effective tax laws, policies, and administration. From the macrolevel historical sociology of Charles Tilly, (13) Margaret Levi, (14) and Michael Mann; (15) to the more microlevel analysis of British political development; (16) to the recent accounts of twentieth-century American political and legal history; (17) scholars have attended to the historical dynamics between wars, taxes, and the politics of fiscal citizenship. As the economic historian W. Elliot Brownlee has shown, wars frequently have been pivotal markers in American history, signaling the collapse of previous political and economic regimes, while ushering in the emergence of new fiscal orders. (18) The authors recognize this undeniable fact, acknowledging that "the history of America's tax system can be written largely as a history of America's wars." (19)

Yet, what Bank, Stark, and Thorndike have to offer, beyond the lawyer's and historian's careful eye for the importance of legal doctrine and detail, is an emphasis on the fragile yet essential discourse of shared sacrifice that has motivated past wartime tax policymaking. Like other scholars writing about the history of fiscal policy, (20) the authors identify taxation as a fundamental part of the social contract between states and their citizens. Although they acknowledge that the sacrifices of war can be borne in many ways, the authors focus on the distribution of tax burdens during wartime as the primary means for measuring the fairness of shared sacrifice. With this metric, Bank, Stark, and Thorndike attempt to refrain from passing judgment on the recent Bush Administration's wartime tax policies. Indeed, War and Taxes is not meant to be a partisan brief against the Republican Party's recent penchant for tax cuts and deficit spending. Instead, the authors have set out to provide a judicious, yet ironic, account of the long history of wartime opposition to tax increases.

In contrast to the conventional wisdom that presumes that wartime patriotism has always and everywhere trumped self-interest, the authors contend that "America's history of wartime taxation is not quite the heroic tale that many Bush critics seem to imply" (p. xiii). War and Taxes seeks to remind readers that many previous lawmakers also resisted spreading the burden and costs of conflict on to the American people. Some of our most celebrated historical leaders have sought, as the authors put it, "to delay, deny, and obscure the trade-off between guns and butter" (p. xiii). In the past, even during popular wars, "elected representatives have often made room for self-indulgence, easing burdens for some constituents while raising them for others" (p. xiii).

Although Bank, Stark, and Thorndike do not claim that America's tradition of wartime sacrifice is a myth, they maintain that the reality of past wartime tax policymaking has been complex and contested. Conventional criticism "misses much of the complexity of American history. Indeed, as a nation, our commitment to wartime fiscal sacrifice has always been uneasy--and more than a little ambiguous" (p. xiii).

In their careful efforts to provide a balanced and measured history, however, the authors inevitably draw attention to the ultimately unprecedented fiscal policies pursued by American leaders from 2000 to 2006. And herein lies the irony: War and Taxes provides a valuable and necessary corrective to the overly romanticized history of wartime sacrifice, but despite its attempts to bracket the highly partisan and ideological aspects of our recent wartime tax policies, the book can also be read as a damning indictment of recent Republican tax policy. Past leaders may have contested and cloaked the need for wartime tax hikes, fearing the political consequences or biding time for more opportune moments. Eventually, however, they all gave in. Only the Bush Administration and its congressional allies resolutely failed to accept fiscal responsibilities. Other analysts have been more explicit in their condemnation of the Bush Administration and ideologically driven tax cuts, (21) but Bank, Stark, and Thorndike provide a subtle, indirect--and perhaps even more effective---critique of recent Republican wartime tax policies.

Undergirding the ideas of shared wartime sacrifice, which are at the heart of War and Taxes, are even more profound questions about the precise meaning of the obligations and responsibilities of belonging to a political community. The vast and rich historical and legal scholarship on civic engagement and national identity has rigorously documented how the obligations of citizenship, (22) especially during wartime, (23) entail heightened sacrifices among members of a liberal democracy, (24) and how those sacrifices illustrate the greater trust that citizens place in their political leaders during national emergencies. (25) Much less attention, however, has been paid to the other side of citizenship--the increased responsibilities of political leaders and policymakers to maintain such trust. If civic responsibilities require citizens to forgo certain activities and at times even surrender life and liberty, then surely public officials must have a reciprocal duty to ensure that such sacrifice is shared by all members of a political community. The politics of fiscal citizenship thus requires the state, as a relatively autonomous actor, to exercise the discipline...