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Year of Award

1990

Degree

Master of Science in Taxation (MST)

College

College of Business & Professional Studies

Degree Program

Taxation

Department

Business Administration

Keywords

TRA86, reform, code, IRS, adjustments

Abstract

The Tax Reform Act of 1986 (TRA86) ushered in a new package of tax reform in the United States. So great was the change, that the 1954 Internal Revenue Code was replaced by a newer, updated, 1986 model.

The new Code was designed to promote greater fairness within the system. Fairness, both real and perceived, was considered key in perpetuating confidence in a system based on self-assessment.

As a cornerstone to the 1986 Code, a totally reworked alternative minimum tax, or AMT, was introduced. The new AMT superceded earlier versions in that it became a parallel system to the regular tax, as it had been an addon system in years previous.

The AMT had as its stated intention a broadening of the tax base such that all taxpayers would share in the tax burden. With all taxpayers so sharing, all would believe that they had been treated fairly.

This report took note of the intent of Congress in implementing the AMT, and then proceeded to analyze the secondary system both on a segmented basis (preference by preference, adjustment by adjustment), and later in an overall sense.

Based on the analysis, the intentions of Congress were determined to be expedient and political, designed more to aid in reelection efforts than for the good of the country.

Recommended as an alternative to the parallel regime, a one-tiered system was (re) introduced. The system would be kept as "flat" as possible, with limited incentives included as an exchange for less progressivity in tax rates. In the event some stimulus was needed in the economy, the necessary incentive would be codified and the rates adjusted.

The likelihood of the American people experiencing Congressional action of a less political nature in the future was determined to be remote, so for new taxpayers may only receive comfort in remembering that hope springs eternal.

Document Type

Restricted Thesis

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