Advancing a Free Society

Data Matters: The 1986 Tax Reforms

Tuesday, June 12, 2012

This week’s installment of Data Matters features data presented by Tammy Frisby, a research fellow at the Hoover Institution who also teaches in the political science department and public policy program at Stanford.

This week on Capitol Hill, there was renewed attention to the looming Taxmaggedon (or Taxmageddon; take your pick), which involves, among other pending tax code changes, the scheduled expiration of lower tax rates on income, dividends, and capital gains, and the end of the extended payroll tax holiday. There is now more public talk from senators and members of Congress about using the threat of Taxmaggedon in January 2013 to build a legislative coalition for a sweeping tax overhaul that would preempt the economic and political damage that Taxmaggedon would wreak.

For all the uncertainty about what will come of this talk, this is a safe bet: the next six-and-a-half months will be filled with comparisons to the last major tax code reforms in 1986.

Tammy Frisby has shared with us a pair of tables, which she used as a starting point for her own ongoing research on the politics of tax reform. These tables present the major changes made to the tax code with the 1986 tax reform law. The tables compare major provisions in the individual and corporate tax codes before the reforms and as passed in the 1986 law. The middle data two columns in each table show the proposed changes by two main administration plans ("Treasury I" and the plan out of the Reagan White House). Compare these plans to the final law to see where administration reformers hit political obstacles.

As we point out in the tables' titles - the 1986 tax overhaul created a cleaner - but not a clean - tax code. Tax reformers in 2012 face prodigious challenges to reach even the success of the Reagan-era reforms, challenges that are no less daunting than Taxmaggedon.

Click on the images to enlarge.

Tammy Frisby is a regular contributor to Advancing a Free Society. You can read her analysis of policy making and elections here. She also provides analysis of the 2012 election in audio and video podcasts that are part of Hoover's 2012 In Perspective series.

With Data Matters, we highlight data relevant to public policy that Hoover fellows are using in their research. We feature original data, data from another source that Hoover fellows are presenting in a new way, or data that fellows find helpful in shaping their own thinking. Visit the Data Matters archive here.

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