The 1986 Tax Reform Act Turns 27

On this day 27 years ago, President Ronald Reagan signed into the law the Tax Reform Act of 1986, which stands as the last major overhaul of the US tax system. The law serves as the ultimate example in this country of tax base-broadening and tax rate-lowering reform and is often cited as the inspiration for many tax reform plans today. The Act consolidated individual income tax brackets from 15 to 2, reducing the top individual rate from 50 to 28 percent and the top corporate rate from 46 to 34 percent.

On Income Tax's 100th Birthday, Time for Another Look

Today marks the centennial anniversary of the federal income tax, signed into law on October 3, 1913 by President Woodrow Wilson. Though this date marks the beginning of the modern income tax, there were previous iterations of income taxes in the United States, one enacted during the Civil War (which expired in 1872) and another in 1894 (ruled unconstitutional the next year).

House CR Would Worsen the Deficit by Repealing the Medical Device Tax

As we explained this morning, the House of Representatives recently passed a continuing resolution funding the government at FY 2013 levels through mid-December. In order to garner support from enough House Republicans, the bill also contains three Affordable Care Act-related provisions – it delays implementation of the Affordable Care Act for a year, it includes a provision that delays for a year the requirement that insurance plans cover contraception, and it permanently repeals the medical device tax.

Senator Levin Presents Ideas for Sequester Replacement

Last week, Senator Carl Levin (D-MI) introduced legislation that would increase taxes on multinational companies, and suggested that the revenue should be used as part of a sequester-replacement package. According to Sen. Levin's office, the bill S.

Senator Mike Lee Introduces Tax Reform Plan

On Tuesday, Senator Mike Lee (R-UT) presented his Family Fairness and Opportunity Tax Reform Act, which will be introduced in the coming days.

The Tax Break-Down: Section 199, the Domestic Production Activities Deduction

This is the fifth post in our blog series, The Tax Break-Down, which will analyze and review tax breaks under discussion as part of tax reform. Last week, we wrote about preferential rates on capital gains and the child tax credit.

Tax Policy Center: Fewer Americans Pay No Federal Income Tax

One area of controversy in the last election was the percentage of American households that pay no federal income tax, often cited as 47 percent. The number actually peaked at 50 percent in 2009, but that proportion will fall to 43 percent this year.

Tax Reform Targets Corporate Breaks

The broad outlines of tax reform have always been clear. Lawmakers trim or eliminate certain tax expenditures and use some or all of the additional revenue to lower tax rates. As a general concept, most economists can agree that this approach of broadening the tax base and lowering rates will have positive economic benefits, reduce economic distortions from our tax code, and put the country on a more secure fiscal footing. 

The Tax Break-Down: Preferential Rates on Capital Gains

This is the third post in a new CRFB blog series The Tax Break-Down, which will analyze and review tax breaks under discussion as part of tax reform. In previous posts, we've written about the State & Local Tax Deduction and Last-in-First-Out (LIFO) Accounting rules.

An Example of Reforming Beyond Tax Expenditures: Executive Compensation

Before leaving for August recess, Senators Jack Reed (D-RI) and Richard Blumenthal (D-CT) introduced S. 1476, which would end the ability of businesses to deduct any executive salaries over $1 million. Currently, regular salaries over $1 million cannot be deducted for the five highest-paid employees, but performance-based incentives are fully deductible, per section 162(m) of the tax code.

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