On October 22, 1986, President Reagan signed a bill that had been worked on by Treasury and Congress for over two years. The Treasury Department had started with an 800+ page report that examined existing law and its strengths and weaknesses and included a variety of proposals, including a VAT. That bill and its major tax revision was the Tax Reform Act of 1986.
In the past 25 years, some of the Act's key features have disappeared, such as a 2-rate structure for individuals that taxed capital gains the same as ordinary income. The TRA86's re-invigorated AMT for individuals was estimated to raise $334 million in 1991 (yes, million!). Today, the temporary "AMT patch" used to keep about 20 million individuals from owing AMT costs over $85 billion!
I have a short article in the AICPA Tax Insider this week - The 25th Anniversary of the Tax Reform Act of 1986, that provides some history and notes some of the significant changes in the law since 1986.
What do you think about Congress trying to get back to the TRA'86 along with instituting some international tax reforms/modernization?
The photo of President Reagan signing the TRA86 is from the Social Security Administration archive.
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