r D AX law has, in recent years, become a major method for implementing federal economic and social policies. The various provisions of the Internal Revenue Code have I 5 created a massive, hidden federal system of tax subsidies which the Congressional Budget Office estimates will total $228 billion for this year, nearly 30% of the entire federal budget (1). The Carter Administration set the stage for the increased stature of tax policy when it spotlighted various tax measures as the primary means for implementing its energy policies. The Reagan Administration has gone far beyond this initial phase, however, with its heavy reliance on "supply side" economics. Its multifaceted tax cut program, combined with drastic budget reductions, is supposed to solve the economic woes of both the American public and American industries. Despite its increasing visibility in national policy debates, tax policy remains a mystifying subject to most of the American public, including most social service and public health professionals. For the most part, public health advocates have not taken part in the tax policy debates, and public health researchers have not adequately analyzed either the negative implications of current tax measures for the public's health or the potential uses of tax reform in furthering public health goals. This paper outlines the significance of tax law in setting federal health policies and discusses the major types of tax measures which exist today. The role of tax law in setting federal alcohol policies is then analyzed, including its current impact on alcohol use and alcohol problems and its potential as a tool for prevention. The paper concludes with a discussion of the future place of tax law in public health policy formation.