This book is a collection of articles about the development of taxation in nine European countries from the end of the Napoleonic Wars in 1815 until the outbreak of the First World War in 1914. In addition to the country chapters, there is an introduction by the editors as well as a concluding chapter.

The liberal state in the title of the book apparently refers to the state whose tasks are defined by its interactions with an increasingly industrial and market-based economy. During the period covered, the functions of the state expanded beyond the framework of the night-watchman state to include the provision of an increasing share of the infrastructure of modern society in areas such as education and transportation. Towards the end of the period we also begin to see the contours of the modern welfare state, which further increased the need for tax revenue. Revenue did in fact increase, but the trend was less pronounced and less uniform than the hypothesis of Wagner’s Law would lead one to expect. This was a period of economic growth, and the expansion of the private and public sectors tended to proceed in step with each other.

Martin Daunton describes the development of the British tax system during the nineteenth century. Tax revenue and public expenditure declined as a percentage of GDP after the end of the Napoleonic Wars, and started to rise only towards the end of the period. Daunton provides an interesting account of the process whereby British politicians re-created trust in government after the earlier perception of the state as a “tax eater.” He ascribes the success of this process to the willingness of the economic and political elite to adopt measures—like the reform of the income tax and the abolition of the Corn Laws—that demonstrated their disinterestedness.

The experience of the Netherlands is discussed in the article by Jan Luiten van Zanden and Arthur van Riel, where the authors argue that the structure of taxation reflected the changing balance of power in national politics. Richard Bonney writes about “The Apogee and Fall of the French Rentier Regime.” After the Napoleonic Wars, public expenditure remained for a long time below 10% of GDP. It increased somewhat at the time of the Franco-German War, but a sharp increase did not come until the eve of the First World War. The rentier class had been very influential in French politics during the nineteenth century, and had succeeded in abolishing direct taxes until the income tax was introduced in 1914. The constraint on taxes was reflected in a significant increase of the public debt during this period.

Mark Spoerer gives an interesting account of “The Evolution of Public Finances in Nineteenth-Century Germany.” Before unification in 1871, Germany consisted of a number of independent states with different tax systems, which, to some extent, engaged in tax competition with each other, thus providing an interesting historical case to study for modern experts in this area. Particular attention is paid to the public finances of Prussia, where, in the early years of the century, the direct tax took the form of the so-called Klassensteuer, by which people paid a fixed amount according to their social class. A regular income tax was introduced in Prussia after the July Revolution of 1848, and was gradually made progressive in the decades before the First World War. An interesting feature of this chapter is that it links the development of the tax system to the views of public finance economists such as Adolph Wagner. The story of the public finances of Austria-Hungary, as told by Michael Pammer, is in some ways similar to Germany in that the country consisted of a number of territories whose finances were gradually centralized. Historians of thought will be familiar with the fact that Böhm-Bawerk was for some time the Austrian minister of finance, but little is said about his contribution to policy except for a brief mention of his involvement in what appears to have been a major tax reform in 1896.

Lennart Schön reviews the Swedish experience. The time series data show the pattern that is by now familiar from some of the earlier chapters: a relative decline of the public sector in the first part of the nineteenth century, followed by an increase from about 1850. Schön points out that the reliance on indirect taxes and tariffs made the tax system basically regressive while the gradual introduction of income taxation moved the system in the direction of progression. Once again, one must regret that so little is said about the public and academic debate over taxation issues. We are told only that David Davidson thought the early debate was of a high international standard, and at the end of the century the principles of tax policy engaged the attention of economists such as Knut Wicksell and Gustav Cassel.

Giovanni Frederico relates the history of the Italian public sector. The first part of the story is complicated by the existence of several independent states, although the author focuses mainly on Piedmont. The story of unified Italy pays a good deal of attention to the local public finances, discussing some of the considerations that led to shifts of responsibility between the central government and local communities. There is also an interesting discussion of the changes of political power that came with the extension of the franchise and the ensuing changes in the structure of taxation.

The chapter on Spain—by far the longest in the book—is by Francisco Comín. In the early part of the century, the history of taxation is an account of a number of tax reforms that were abolished a few years after they were introduced. The year 1845 is identified as the birth year of the “liberal tax system,” combining direct and indirect taxes. A tax reform introduced in 1900 created a modern-style income tax that gradually came to include redistributive elements. Comin argues that the tax and expenditure reforms in the second half of the century served to promote economic growth, although he also points out that the diversion of a large part of tax revenue to the servicing of the public debt put severe constraints on economic policy. The editors of the book are themselves the authors of the chapter on Portugal, which has some parallels with the story of Spain: in particular, the significance of reforms around the middle of the century, and the importance of the public debt that acted as a brake on productive public spending.

Larry Neal’s concluding chapter contains a summary of the foregoing chapters and an attempt to provide some general structure on the variety of the countries’ historical experience. Neal distinguishes between Great Britain and all the rest, and finds that the country accounts “demonstrate the uniqueness of the Anglo-American perspectives on public finance created by their respective histories. The persistent rejection of Anglo-American policy recommendations by the rest of the world [sic] becomes more understandable, if no less frustrating.” I must admit that I find this sweeping statement quite puzzling. Who are those who make these recommendations? And what is it that makes Anglo-American tax policies superior to those of the rest of the world?

Altogether, the book gives a useful survey of the development of tax revenue and public expenditure in a number of European countries over “the long nineteenth century.” Its ambition is mainly to describe the development of aggregate revenue and public spending, and the implications of deficit spending for the public debt. In this it succeeds on the whole very well. It is less satisfactory in its analysis of the tax structure and the composition of public spending. Here the attempts that are made at explaining tax reforms and changes in public expenditure typically take the form of political science or public choice perspectives related to the extension of the franchise or the increasing power of the commercial middle class. This is interesting and valuable, but I would have liked to know more about the nature of the public policy debates. We are told that there were such debates but rarely what they were about. A rare but interesting exception is the editors’ brief mention of the Portuguese minister of finance (1801–1803), Souza Coutinho, who, as “a keen and attentive reader of Adam Smith,” went on to “outline the basic principles for the functioning of a modern fiscal state.” More information about this and other examples of the effects of ideas on policy would have increased the value of this book to the historian of economic thought.