From:- http://www.religioustolerance.org/xmas_date.htm
Luke 2:1-4 mentions that Jesus' birth occurred during the time that Caesar Augustus had ordered all of the known world to be taxed. Luke said that every person had to return to the city of his ancestors, to be registered and taxed. Joseph went to Bethlehem, because he was of the house and lineage of David. But this universal census and tax never actually happened. The Jewish historian Josephus wrote a very complete history of the Jews in Palestine. He does mention a census which was conducted in Judea in 6 CE. But this was only a local census, not one that would enable "
all the world to be taxed." Its purpose was to count the male population so that they could be taxed at a later time. And it triggered a major uprising among the Jews, who regarded a census as against scripture and the will of God. He does not refer to an earlier census and poll tax.
At the time of Jesus' birth, the Jews were still subject to King Herod. Since Palestine was a client kingdom of Rome, only the king had powers of taxation in the land.
2 It was only in areas that were operated under direct Roman rule that Caesar Augustus could have taxed the citizens directly. There is no record of a mass migration of adults to their ancestral cities in order to be registered. It would have been totally impractical to hold a census in this way. The primitive transportation systems of the Roman Empire would have been totally inadequate to handle the flow of people. The entire empire would be largely shut down for many months while people were returning to their home towns. Even today, with airplanes, trains, busses and automobiles, it would not be practical to hold a census in this manner.