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Finance: What is the Tax Reform Act of 1...4 Views

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Finance a la shmoop what is the Tax Reform Act of 1986 ah it was a simpler

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time Democrats and Republicans working [Politicians jumping up and down]

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together shaking hands across the aisle then sharing mistresses well the tax

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reform act of 86 was the on-court - the act of 81 wherein Ronald Reagan moved to [Reagan appears]

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dramatically simplify tax codes he cut taxes but somehow these cuts were to be

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revenue-neutral to the taxman and go figure that one like cutting taxes would [Revenue forms cut in half]

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stimulate business which it did which then generates more income which is then

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taxed more something like that that's the logic anyway well a big theme of

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these tax cuts was to shift the burden from individuals paying very high

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marginal tax rates Thank You comrade Jimmy Carter to corporations many of [Jimmy Carter in office]

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which had found loopholes so that billions of dollars were avoided in

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paying taxes kind of like today's Apple and Google basing themselves in Ireland

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and individuals paid with their liver and lungs in those days comrade Carter [Man holding liver at hospital desk]

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had imposed a 50% plus top rate which kicked in at a relatively low dollar

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level like you were wealthy if you earned more than a hundred grand a year

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today's dollar adjusted Reagan brought that top rate down to 38 percent on its [Man bumps into Reagan]

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way over time down to 28% and consolidated 15 different break points

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in tax to being just four and yes the people at H&R Block wept they'd had it

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great with the complex Carter era accounting gravy train there well a ton [Person dealing cash]

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of other things were simplified and codified with the theme being that the

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new IRS was gonna go after you if you didn't pay up it's like they're cutting [Woman running in woods screaming]

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your fees so you better at least pay the low rates here these days on taxes yeah

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and audit volumes increased dramatically why?

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well since taxes were now so much easier to pay you'd better stop finding lies in

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trickery and other deceitful ways to avoid paying you're legally owed

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obligations luckily this tax reform act clarified and finalized resource

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allocation debates as driven by taxes forever so that after 1986 while there

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were no more debate about tax changes and everything from [Red siren alarm appears]

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there forward for the next few hundred years won't need to change a lick oh

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wait actually the opposite is happening always [Politicians boxing each other]

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