Federal, state, and local governments share responsibility for providing essential services to the American people. Ideally, this federal system would involve close cooperation and coordination among the different levels of governments. In practice, however, that often does not happen. We thus examine when intergovernmental relations succeed, and when they fail, in providing effective tax and budget policies. We draw lessons not only from U.S. experience but also from other nations, which use a diverse range of mechanisms to fund and administer their government programs and services.