Special Report: 25 Years After Tax Reform, What Comes Next?

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.

FORBES: SPECIAL REPORT