After a long period waiting in the wings, the Fisc (the state treasury, or the larger system of public finance) has returned to center stage in comparative politics. During this time, fiscal sociologist Joseph Schumpeter was more likely to be cited for his “creative destruction” thesis, than for his “crisis of the tax state” analysis. While the “return to the state” dates back to the late 1970s, it still took another decade before taxation became a monograph headliner, with influential works by Margaret Levi (Of Rule and Revenue, 1988), Charles Tilly (Coercion, Capital and European States: AD 990–1992, 1992) and Sven Steinmo (Taxation and Democracy: Swedish, British and American Approaches to Financing the Modern State, 1996). Since then, tax policy and extractive capacity have increasingly come to be recognized by comparativists as central to state-building projects, thus confirming Edmund Burke's old adage that “the revenue of the state is the state.” As part of this fiscal revival in comparative politics, Aaron Schneider has rightfully earned the status as leading expert on Central America with his new book, State-Building and Tax Regimes in Central America.

The book starts from the premise that economic globalization has meant that “building states is more important and more difficult” than ever (p. 1). While a well-developed literature on state building already exists, there is still only limited understanding of state-building processes in times of sudden and significant economic change. Yet in such circumstances, Schneider argues, “the tasks of state building must be taken up anew.” Thus, his new book asks dual research questions: How do governments sustain themselves in the face of mobile sources of revenue, and how do new social actors fit into already established political institutions? (p. 1)

To answer these questions, Schneider employs a macrosocial analytical framework. He first establishes a historical pattern going back to the mid-nineteenth-century early-independence period in which economic changes, often instigated by external forces, prompted the rise of new sets of domestic elites, who sought state support to enhance socioeconomic interests and affirm sociopolitical status. The extent to which new elites are successful, he argues, influences different types of states and tax regimes across the Central American isthmus. In this process, he identifies the “structure of emerging transnational elites” as the principal causal variable. Elite structure displays two defining features: 1) cohesion—the degree of organization and coordination within the new elite, and 2) dominance—the ability to impose preferences on rival traditional elites and populist forces (pp. 9, 10). The cohesion and dominance of new economic elites, in turn, directly shapes a state's tax regime, as indicated by three defining features: 1) capacity—the ability to extract revenue; 2) universality—the degree of equality across sectors in the levying and collecting of taxes; and 3) progressivity—the degree of fairness in allocation of the tax burden (pp. 3, 4). Finally, Schneider contends that variant tax regimes provide the fiscal foundation for different types of states in the region, most notably, for example, in the twentieth century: military authoritarianism in Guatemala and El Salvador, patrimonial authoritarianism in Honduras and Nicaragua, and social democracy in Costa Rica (Table 3.2).

The empirical focus of the book is on more recent history, the period of neoliberal-influenced privatization and globalization that reanimated and transformed Central American economies following the war-ravaged 1980s. During this period, a new set of transnational elites emerged whose fortunes were tied to previously undeveloped economic sectors, including light manufacturing, ecotourism, and international finance. Schneider shows that concurrent with these regional economic changes, fundamental fiscal change occurred between 1990 and 2005, with a decided shift toward greater reliance on direct income taxes and indirect consumption taxes, and less dependence on commodity trade taxes. Below this regional taxation overview, however, he uncovers notable variation among five Central American states (Panama is not included), which is attributed to variations in elite structure. Schneider places the new transnational economic actors into a dynamic sociopolitical context, and then gauges success in reforming tax regimes to their liking through a comparative statistical overview.

Schneider complements these general findings with three well-crafted and richly detailed case study chapters, which exemplify the range of variation in state-building tax-regime outcomes. The first case, represented by El Salvador, is referred to as “inside-out” state building. New international finance-based transnational elites were cohesive and dominant; while working through the politically competitive ARENA Party, they reformed the tax regime to their advantage by increasing extractive capacity but maintaining selectively low progressivity and universality. The second case, represented by Honduras, is labeled “outside-in” state building. Here, new economic elites connected to tourism and other cross-border activities were dominant but divided; they mostly followed a policy agenda defined by international actors, which led to a tax regime that favored international taxpayers over domestic ones and displayed less progressivity and universality, with only slightly improved capacity. The third case, represented by Guatemala, is categorized simply as a state-building “crisis.” New transnational elites were divided and subordinate in the political process; their reform efforts proved negligible, as the tax regime continued to display very low capacity, progressivity, and universality to the advantage of traditional elites.

The research design is an effective mixed-methods qualitative-leaning approach. The case study chapters, especially, prop up the analytical framework with a solid and convincing empirical foundation. For the reader, they are especially rewarding for the insightful conceptual framing and original source work. Schneider's insight into this subject is more than academic. His firsthand experience with Central American taxation derives from positions with influential international policy institutions, such as the Institute for Development Studies at Sussex and the Inter-American Development Bank, which provided numerous and frequent contact with high-level political and economic elites in the region. Schneider was an adept participant observer. The fieldwork conducted for the project, and the resulting source base, is most impressive. The theoretical conclusions are particularly persuasive because the project is built from the ground up, with empirical findings supporting insightful and nuanced conceptual analysis.

Have no doubt, the project is well defined and well executed, and the book is a good read too. Nonetheless, there are several issues not explicitly covered in the study that might usefully serve for further discussion on the implications of the research for comparative state-building theory. These include elite actors, case selection, and analytical concepts. To begin, the study rests on the distinctive concept of “new transnational elites” as the major causal variable in the analysis. Given the well-established reputation of Central American elites as incestuous, exclusive, and self-perpetuating, to what extent was the new bourgeoisie really distinctive from the old aristocracy? In El Salvador, for example, ARENA Party President Alfredo Cristiani, who is depicted as a champion of the new transnational elite, was born into a rich family connected to coffee interests, was at the top of the established military elite, and married into one of the country's long-reigning oligarchic “14 families.” Clearly, neoliberal tax reforms had intersector distributional consequences, which Schneider ably demonstrates; it is less clear, however, that traditional and new elites were playing a fiscal zero-sum game, or that at least some overlap existed, perhaps informally, between these two sector-defined elite cohorts. The potential for fuzziness in the concept of “new transnational elite” could be countered with a more developed sociopolitical profile of the new elite actors.

Second, while the three focus case studies represent three variant elite structures and tax-regime outcomes, it would have been interesting also to learn more about Costa Rica. To what extent is the Fisc a factor in explaining Costa Rican “exceptionalism” regarding economic and political development in Central America? In the book's historical overview chapter, in particular, Costa Rica appears as a macro-fiscal outlier, collecting significantly more revenue per capita than its neighbors. This deviation is noted in the chapter but not developed at length, nor does it feature prominently in subsequent chapters concerning globalization-inspired tax reforms. Granted that a book cannot do everything, but by passing on Costa Rica, the study missed the opportunity to explore more systematically the issue of tax compliance. We know that elite taxpayers avoid compliance in the three case chapters. But are Costa Rican citizens more compliant with revenue demands than their neighbors? At least some revenues are collected everywhere, but by what means? Is quasi-voluntary compliance simply a meaningless concept in Central America? Instead, the analytical discussion subsumes compliance under capacity and progressivity, which obscures the potential insight that this concept could lend to state–society relations.

Finally, the analytical concepts employed in the study perhaps unnecessarily limit its theoretical reach. The study offers a superb treatment on the politics of tax reform in Central America. But fiscal sociology is based on a more encompassing notion that the Fisc—the state tax regime—influences and shapes society as well. The analysis in this regard is unilateral: The structure of new elites influences, to varying degrees, a new tax regime. So where does state building fit in? It fits in nicely, when the discussion is focused on tax policymaking. The study is rich in showing how new elites try to influence the policy process through political elections, legislative initiatives, and bureaucratic bodies. These institutions are all part of the state, for sure, but the state is more than this. It is an extension of social relations, the repository of coercion, the arbiter of conflict, the dispenser of life chances, and the narrator of collective meaning. In the book's analytical discussion, however, the concept of state building seems to be conflated with the concept of tax regime. As a result, the discussion is limited in that it does not get at the effects of the tax regime on society. The conclusion points out that despite the rise of new economic actors and significant tax reforms (at least in El Salvador and to a lesser extent in Honduras), the role of the state and the nature of state–society relations did not change very much in Central America. Even if this is so, the theoretical conclusions would be bolstered by disentangling the concepts of tax regime and state building, and providing a characterization of the state before and after the recent spate of tax reforms, which could be set in a broader comparative perspective.

These remarks are not meant to diminish appreciation for the high quality of research in this project. The meticulous care taken by Schneider in presenting the empirical findings should serve as example for comparative scholars. After all, you cannot get your theory tight if your case study is not right. In this monograph, Schneider does both.