The author sketches a theory of relations among the nation's federal, state, and local governments. He begins with the assertion that all governments, even democratic governments, are dangerous and suggests a solution to the potential abuse of power by government as competitive federalism: the encouragement of rivalry among state and local governments to offer citizen-taxpayers the best array of public services at the lowest costs. If citizens feel that their taxes are too high or that the level of government benefits is too low, they can vote with their feet and move to other state or local governments where the balance between taxes and services is more to their liking. The more that government officials must confront this ultimate test of their decisions, the author concludes, the more they will pursue policies that match the public will.

A remarkable change has occurred in how we finance the public enterprise, yet this change has gone largely unnoticed by the general public. Policy makers in the federal, state and local levels of government have had to respond to this change. The causes of the change, future policy directions, and the eventual impact on society of this change is the subject of this book. Six of the nation's most influential economists, political scientists and sociologists have been asked to comment and their views can be found here.

Contributors provide a fascinating account of how federal countries are confronting the traditional challenges of conflicts over division of fiscal powers while also coping with emerging challenges of globalization and citizen empowerment arising from the information revolution. They analyze how relationships and roles in different orders of government are being reshaped and show how local solutions inspired by global principles help strengthen government accountability and improve the quality of life for citizens.

Monograph analysing concept of a fiscal federalism in which taxation and debt finance in a federal system is dealt with.