GOVERNMENT BUDGETS that in the aggregate exceed 30 percent of the gross national product pose hard questions for policy makers and public finance experts alike: How do taxes and government expenditures affect the stability and growth of the economy? What principles should guide decisions about whether the government should undertake or finance a given activity? Who bears the burden of the major taxes levied by modern governments to finance their expenditures? How should governmental responsibilities be distributed in a federal system and at what level of government-- and with what taxes--should various public activities be financed?
These and related questions were the subjects of the program of Studies of Government Finance that was undertaken more than a decade ago by the Brookings Institution with the financial assistance of the Ford Foundation. A cooperative research effort of Brookings, various universities, and other nonprofit research institutions, the program was supervised by the National Committee of Government Finance, assisted by an advisory committee of distinguished economists and tax lawyers. It produced thirty-five books, over fifty doctoral dissertations, and numerous articles in professional and other journals. Many of the ideas presented in this