The Tax Reform Act of 1986 lowered marginal tax rates and broadened the tax base. Because the law won great bipartisan support and boasted a sound economic base, many economists believed that the sweeping reform would endure for years. But subsequent legislation significantly increased marginal tax rates and narrowed the tax base to produce a hodgepodge far from the economic ideal.

Once again economists and politicians are calculating and debating how another fundamental tax reform could benefit the economy and the nation. And although most economists agree that excluding capital from taxation would tremendously boost the economy, they do not agree that a sudden switch to a consumption tax would be an obvious improvement. 

The authors of this volume challenge the common perception that the removal of old distortions from the tax system would seriously hurt segments of the economy. The three essays consider the understatement of benefits from fundamental reform, the perniciousness of the current tax system, the distribution of benefits from reform, the strengthening of the stock market from reforms past and future, and the stability of the housing market in the process of reform. Click here for the book summary of this book.

Authors include Donald Bruce, Center for Business and Economic Research and University of Tennessee; Kenneth L. Judd, Hoover Institution; Douglas Holtz-Eakin, Syracuse University; Andrew B. Lyon, University of Maryland; and Peter R. Merrill, PricewaterhouseCoopers. Commentators include Alan J. Auerbach, University of California; William G. Gale, Brookings Institution; and James R. Hines Jr., University of Michigan.