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One of the major architects of comprehensive tax reform has revised his widely acclaimed book on tax policy to reflect the changes brought about by the Tax Reform Act of 1986 and all other major changes in tax laws since 1983. Joseph A. Pechman's Federal Tax Policy is a nontechnical book for general readers and students interested in taxation as an instrument of public policy. It emphasizes such current issues as a comprehensive income taxation, inflation adjustments in income taxation, graduated income taxes versus expenditure taxes, the effects of taxation on economic incentives, and fiscal relations between the federal and state and local governments. Pechman presents and evaluates contrasting views on most forms of taxation--personal and corporate income, general and selective consumption, payroll, estate and gift, property, and state and local--and offers a perceptive analysis of the process of tax legislation and the role of taxation in the fiscal policy. He also provides a valuable series of statistical table on tax developments and an extensive bibliography on tax theory and practice.

Proposals for tax reform must be appraised against the subjective criteria of fairness and social policy regarding redistribution of income and wealth and the objec tive criteria of steady economic growth and administrative simplicity. Controversy over the individual income tax cen ters on the tax base and the rate structure. A fundamental change would involve the adoption of a comprehensive income tax base, including not only all capital gains but also various items of imputed income and even gifts and bequests. This concept of income breaks down the distinction between capital and income, would conflict with accepted concepts in all other fields, and would also have undesirable economic effects. High marginal individual income tax rates produce little revenue but distort decisions on personal activity and investment. Though some progression in rates is almost universally accepted as fair, confusion about the effect of rate changes at different levels has led to excessive top rates. Estate and gift taxes might be com bined into a single progressive transfer tax, but this would dis courage gifts before death and hence be undesirable. The inci dence of the corporation income tax is not known, but theorists and businessmen increasingly believe that it is shifted forward. As such, it is a capricious excise tax, and it also holds a price umbrella over less efficient producers. Partial substitution of a value-added tax would be a major reform. Under present inter national agreements, it could also improve the balance of payments.

In this article, the author considers the peculiarly preferred position of the tax lien under section 67 of the Bankruptcy Act. From his consideration of the position of the trustee and the claim of the government he concludes that the law as presently applied is inequitable. He advocates that the government's secret lien be held invalid against the trustee, that the inchoate lien doctrine should not be applied in bankruptcy, and that the doctrine of Moore v. Bay be modified.