Twenty Years Later, What’s Left of the ’86 Tax Reform?
October 5, 2006
This October 22nd marks the 20th anniversary of the heralded Tax Reform Act of 1986, the nation’s most recent federal tax reform effort.
In remembrance, we’ve posted a terrific new commentary looking back at “TRA ’86”, and drawing lessons for those looking to make permanent improvements to the nation’s tax code, rather than the temporary and politically driven adjustments that dominate current tax policy. From the piece:
Tax Reform: What Has Changed Since 1986?There is an old saying that those who forget history are doomed to repeat it. The issue of tax reform is no exception.
The Tax Reform Act of 1986, which was signed into law twenty years ago this month, was considered at the time one of the most significant pieces of legislation ever passed. The fact that Congress went against the wishes of powerful lobbyists in overwhelmingly passing such legislation was seen as a triumph of the American people.
But despite the temporary success of tax reform in 1986 and the apparent conquest of the public interest over the special interests, two failures were evident. First, while the legislation did close special tax shelters for select individuals—events that often became nightly news stories—the reform did little to close the many significant exemptions that inhibit overall economic growth. Also, much of what passed in 1986 to limit special tax loopholes has already crept back into the system courtesy of politicians quick to give in to whatever lobby fills their pockets…