The Oxford Introductions to U.S. Law: Income Tax Law, by Edward J. McCaffery (Oxford University Press, 2012). My rating: 5 of 5.
You pay tax on every paycheck. Someone you know owns a building worth ten times what they paid and pays nothing on that growth. You suspect the rules are tilted, and the reasons are older than most people think. This short book explains them better than anything else I have read.
What the book covers
McCaffery is a law professor, and this volume belongs to Oxford’s series of short introductions for students and general readers. In about 280 pages he covers what counts as income, which costs you can deduct, when gains and losses count, and who gets taxed on what. He also makes an argument. Over time, he says, the income tax has worked more and more like a tax on wages, while people who own capital pay less or pay later. He closes with alternatives, including a tax on spending.
He writes for readers who are not tax lawyers and explains each case plainly.
What stayed with me
Realization is the hinge. Growth in an asset you still hold is not income until you sell it or otherwise dispose of it. That rule goes back to Eisner v. Macomber in 1920. The Supreme Court came back to it in Moore v. United States in 2024 but did not decide whether the Constitution requires realization. Most of the book builds on it.
Buy, Borrow, Die. This is McCaffery’s teaching shorthand. Buy assets that grow without paying taxable dividends. Borrow against them to live, since a loan is not income. Hold them until death, when heirs get a new basis under section 1014. It shows why holding appreciated property can matter so much for a family. The federal estate tax and Washington’s estate tax still apply at death, so the idea has limits.
Four goals. All tax planning, he says, tries to escape, defer, shift, or recharacterize income. It is a useful way to sort any planning question.
Basis and time bombs. Gain is what you receive minus your basis in what you give up. Untaxed growth sits inside an asset like a fuse, and his rule of thumb is that “sooner or later tax time bombs go off.” The two big exceptions are gifts of appreciated property to charity and death.
The tax story behind the headline. “Behind many great financial disasters lies a tax story,” McCaffery writes. Once you see how spending financed by debt escapes the income tax, a lot of financial history makes more sense.
A few notes
The book is from 2012, so update every number. Rates have changed, section 199A came later, and the federal estate tax exclusion is $15,000,000 for 2026. Some of his lines are written for effect. When he says the wealthy can avoid all federal taxes, read it as a point about how the rules fit together, not a literal plan. Depreciation recapture, the estate tax and the cost of borrowing all still apply. His Ninth Circuit gift-and-leaseback example, Brooke v. United States, is real law, but other circuits have rejected similar deals.
For Washington readers: there is no state income tax here, but Washington taxes certain long-term capital gains and has its own estate tax, with a $3,000,000 exclusion for 2026 deaths.
Who should read it
Law and accounting students, financial advisors, and any reader who wants to know why the income tax works the way it does. If you own a business or real estate, the early chapters will change how you think about selling. Read it as background, not as a plan.
Quotes are short excerpts credited to the author. As an Amazon Associate I earn from qualifying purchases. The price you pay does not change. I read this book on my own, and no one asked me or paid me to review it. This review is general education, not legal or tax advice. Laws change, and the right answer depends on your facts. Legal services are offered only through Centerbridge Law Group, PLLC, 1610 Commercial Avenue, Suite 203, Anacortes, Washington 98221. See Disclosures.