Worse, we can see in hindsight that the Tax Reform Act of 1986 mainly shored up the income tax's status as a wage taxit did nothing about the surprisingly simple ways in which the rich can avoid taxes. The income tax is still far too complicated, inefficient, and fundamentally unfair. ![]() But less than two decades later, we're right back where we started. This was a major piece of bipartisan legislationthe centerpiece of Ronald Reagan's second term as presidentand it did indeed close a vast array of loopholes and lower tax rates. Take, for example, the Tax Reform Act of 1986. Until we rethink that, tax reform is doomed. These all relate, as I explain in the book, to our obsession with taxing savings directly. McCaffery: If we try minor, ad hoc reforms just to close loopholes here and there, we do nothing about the deep, fundamental, and structural problems in the tax code. Can't we just reform it or close the loopholes in the tax code to make it more equitable? ![]() Q: OK, so the present system isn't fair to everyone. The wealthiest people in the United States with property pay little to no taxes today, while ordinary wage earners like you and me can't escape from paying high taxes, ranging from a third to half of our earnings! Add to that the tremendous complexity and inefficiency of our system, and you have what I take to be a disaster on your hands. ![]() To explain how badly broken it is, why it needs repair, and how we can make that repair happen. McCaffery: Well, yes, and that's a large part of the reason I wrote Fair Not Flat. But is the income tax system so broke that it needs a complete overhaul? Author of Fair Not Flat: How to Make the Tax System Better and Simpler
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