One may think that the origin of the current tax system in the United States is rooted in the passage of the Sixteenth Amendment to the Constitution (1913), which allowed Congress to collect income taxes. Ajay Mehrotra devotes a mere section of Chapter 5 to the road to ratification of the constitutional amendment, a fact which illustrates that the focus of the book is not on the early twentieth century push towards progressive taxation; the roots of the movement lay further back in political, social, economic, and legal history. Drawing on the four strands of history, Mehrotra seeks to weave the parallel movements together and highlight where they intersect; sometimes the intersections were inevitable, sometimes coincidental. The intersections resulted in a new set of institutions and ideas which ultimately had an impact on the type of government spending, the reallocation of resources across incomes and regions, and a change in the notion of citizenship. While Mehrotra aims to make conclusions about the consequences of these institutional changes and the space it opened for the expansion of the role of government in society, the strength of the book lies in exploring the origins of the new fiscal state.

Mehrotra writes: “The reform-minded political economists who led the conceptual revolution in American public finance could not foresee the far-reaching and unintended consequences of their ideas and actions” (p. 16). Given that, the author seeks to provide evidence for what the actual consequences were. While the author does not oversell the genius of those reform-minded political economists, important time is spent in the book presenting their theoretical arguments with respect to the faculty principle of taxation, which advocates basing taxes on one's ability to pay instead of the benefit the individual receives. The author argues that the work of different constituencies that went into the 1894 income tax law, thwarted by the Pollock decision in 1895, should not be seen as wasted efforts in the history of tax reform. The initial block to a federal income tax allowed for coalitions to focus their arguments for a federal income tax on specific points: (1) there was a history of progressive faculty taxes in the United States, (2) faculty theory had a long and noble intellectual lineage, and (3) progressive taxation was not antithetical to American values and liberal democracy. The change in tactical approach allowed for previously extreme ideas to become mainstream.

Along with the strength of the arguments, certain conditions exogenously created opportunities for these ideas to be implemented. Issues with the local tax assessor, fraught with corruption and collusion because of the decentralized nature of the position, resulted in the movement towards centralization and professionalization of tax assessors. Another fertile opportunity for change came as a result of the growing concentration of capital in corporations. Not only were corporations a target for taxation because of corporate income and corporate social responsibility, but they provided an institutional structure to target individual income. Corporations reduced the cost of collecting and verifying information in order for governments to implement an income tax.

The book is organized chronologically. Part I lays the groundwork in terms of explaining the patchwork of existing taxes across the system of governments, interests involved when considering changes to that set of taxes, and the differing coalitions that emerged which tried to pass a federal income tax law in 1894. Part II illustrates how the changing intellectual climate, state experimentation, and the convenient birth and growth of systemically important actors (corporations) provided fertile ground for a federal income tax. The heart of the book also serves as the heart of the argument, as Mehrotra deftly leads the readers to see the dynamics of institutional change through this story. After all of that buildup, the book half-heartedly closes with two chapters that discuss implementation of the tax and episodes that helped cement the institution. Additional qualitative and quantitative evidence would help strengthen the presumed link between the Treasury Department, WWI, and the concretization of the Sixteenth Amendment.

While some elements of the history of economic thought are present, from the new use of Edgeworth's marginal analysis to emerging theoretical constructs of social welfare, other important developments are missing. One such omission is Alfred Marshall's 1890 contributions to defining elasticity. Discussion of elasticities would have helped explain the efficiency argument for the tax change; elasticities would have also rationalized the movement towards classification that Mehrotra describes as “adjusting charges and prices to ‘what the traffic will bear’ ” (p. 210). Another element that could have been given greater attention is the federalism aspect of tax changes. The author often uses the state government experience to motivate or reinforce the story of changes at the federal level. But a more nuanced approach might discuss in greater detail the heterogeneity of the state experiences instead of using one (Wisconsin) to illustrate tax experimentation. The absence of comparison states leaves the reader wondering whether Wisconsin is a representative state or an outlier. More importantly, competition across governments is missing from the discussion. The federal, state, and local levels might have been learning from each other's experiences, but they were also competing with each other for tax revenues. Comparative advantages across governments in tax collection varied depending on the type of tax; the tax-benefit link as well as the efficiency of tax collection, which changed over time due to the mobility of individuals, were important factors in explaining the ensuing outcome.

Mehrotra has written a remarkable interdisciplinary work with the footnotes alone making a valuable resource. While certain parts were previously published in journals (parts of Chapter 1 and 4, Chapter 6), the main contributions are found outside of these chapters. As a whole, the book merges elements of political, social, economic, and legal history to illustrate how and why this new fiscal order arose.