Introduction: Global tax reform and an iconic mission

Tax reform is now a global preoccupation. Almost everywhere severe financial crises, with their attendant fiscal stresses, and the drive to maintain or increase global competitiveness have led to intensifying, and often conflicting, demands for reforms of tax systems. Many reformers emphasize the need to reduce tax burdens on mobile capital and labor; others focus on increasing government revenues. Some believe that tax reform can simultaneously advance both international competitiveness and tax capacity. Others see conflict between these objectives, and look for taxation to help strike a balance between the homogenizing forces of globalization, on one hand, and the maintenance of distinctive economic, social, and cultural orders, on the other. Meanwhile, the severe underperformance of the global economy has led to widely differing diagnoses, which have dictated conflicting approaches to taxes and tax reform. Regardless of their concerns and strategies for change, tax reformers now intently seek out useful models and analogies, both rigorous and casual, in the experiences of other nations. This volume represents an effort to advance this learning process by exploring the history of the United States tax mission to Japan in 1949–50, during the American occupation (1945–52). General Douglas MacArthur, as Supreme Commander for the Allied Powers (SCAP) – in effect, proconsul of Japan – delegated public finance economist Carl S. Shoup (1902–2000), a professor at Columbia University, to head a mission to undertake a huge task – nothing less than a thoroughgoing reform of taxation in Japan. Shoup’s specific charge was to frame a tax system that both strengthened a democratic state and helped accelerate the pace of capital investment and economic development in that industrial nation.