THE ECONOMIC EFFECTS OF THE TAX REFORM ACT OF 1986
The Tax Reform Act of 1986 constituted the most sweeping post war change in the U.S. federal income tax. This paper considers what the Act accomplished and its implications for future tax policy.
After a review of the Act itself, and why it happened, we consider the evidence of the Act's impact on economic activity and how this evidence squares with initial predictions. Where appropriate, we draw out how consideration of the impact of TRA86 has contributed to the development of the methodology of economic analysis. We conclude with an overall evaluation of the Act.
Alan J. Auerbach, University of California, Berkeley
Joel Slemrod, University of Michigan