On Oct. 22, 1986, President Ronald Reagan signed into law a widely praised and sweeping bipartisan tax reform. It curbed special deductions, exclusions and breaks (tax expenditures, in tax speak) and chopped the top individual income tax rate from 50% to 28% and the top corporate rate from 46% to 34%. Twenty-five years later, the country is in a deep fiscal hole, the tax code has suffered through years of tax “deform” and a ticking time bomb left in the 1986 Act (the alternative minimum tax) has yet to be defused. So there’s wide agreement that another overhaul is in order. But there’s no consensus on what a rebuilt tax system should look like, how much revenue it should raise, or whether the tax burden should be left as it is, shifted up to millionaires and billionaires or pushed down to middle and working class folks, as in Republican Presidential candidate Herman Cain’s 9-9-9 plan.
In this special report, noted academics, front-line tax practitioners and journalists look back and forward. Among the many must-reads: Michael Graetz details his proposal to free 150 million Americans from the IRS; Laurence Kotlikoff describes his 15-15-15 plan; Len Burman looks at the need and prospects for tax reform; Howard Gleckman distills five lessons from 1986 that could help policy makers today; and Kelly Phillips Erb suggests that all of us, unwilling to give up our tax goodies, are a roadblock to tax reform. Finally, several contributors conclude that no matter what happens, there will still be lots of work for the tax accountants and lawyers. What a relief.
Fundamental Tax Reform Is Essential, Inevitable, And Impossible
Twenty-five years after the Tax Reform Act of 1986, tax reform is more needed than ever, but has never faced greater obstacles.
By Len Burman
It’s Time To Free 150 Million Americans From The IRS
A 12.5% national sales tax would make the U.S. more competitive and allow a $100,000 individual income tax exemption and a 15% corporate tax rate.
By Michael J. Graetz
The 15-15-15 Purple Tax Plan Is A Lot Fairer Than Cain’s 9-9-9
My proposal combines a low rate consumption tax, with a low rate estate tax and a progressive payroll tax.
By Laurence Kotlikoff
To Achieve Tax Reform, Washington Should Use 1986 Playbook
There are five hard-earned lessons from the last major tax reform bill that could help policymakers to forge a consensus today.
By Howard Gleckman
I'm From The Government And I’m Here To Help
President Reagan sought to chip away at big government and simplify the Tax Code. Is it deja vu all over again?
By Kelly Phillips Erb
What Could Tax Reform Mean For You?
No one knows what the tax code will look like in a few years, but don’t let uncertainty paralyze you.
By Erik Carter
Flat, Fair And Progressive Taxes?
Economists can't answer what taxes are fair, can you?
By Robert W. Wood
1986 Reform Gave Birth To AMT Monster Of Today
Constant tinkering with the tax system ends up having unintended consequences. Simplification is complex.
By Claudia Hill
I Grew Up With The Internal Revenue Code Of 1986 – Will We Retire Together?
The passive activity rules designed to clamp down on tax shelters provided year of work. A 2013 reform would keep me busy until retirement.
By Peter J. Reilly
Was 1986 Tax Reform Really Simplification? Was It Fair?
A tax professional’s personal reflections on the impact of the Tax Reform Act of 1986.
By Bernard Kent
Wandering Tax Pro Remembers The Reform Act Of 1986
There were so many drastic changes that it became known as the Accountants Full Employment Act of 1986.
By Robert Flach
The 9-9-9 Plan Has Tax Pros Worried About Their Jobs
The campaign rhetoric aims for simplicity, but experts see complications--if-- the plan could pass.
By Deborah L. Jacobs
For all the good the 1986 Act did, it also unleashed the dreaded alternative minimum tax. Time to repeal the AMT.
By Robert W. Wood
Cain’s 9-9-9 Plan Would Cut Taxes For The Rich
It sounds great: small numbers, nice symmetry. What’s not to like? Nearly everyone who isn’t rich would pay more.
By Howard Gleckman
Billionaire Poster Boys For Tax Reform
As FDR knew, if you’re trying to change the law, it helps to put a rich face on your target.
By Janet Novack
