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Tax Reform in 1986 and Tax Reform Now: What's the Difference?

Back in the early 1980s, high unemployment, severe credit issues, and high gas prices crippled the economy. Talk of major tax reform ensued in order to alleviate the growing number of problems that the U.S. faced. Sound familiar? That's because, as so far described, the scenario of the early 1980s seems very similar to what has been going on in the current economic crisis. The difference? For one, tax reform became a reality in 1986, but at least according to one article in the Wall Street Journal, it is unlikely to happen again in 2013-14.

While like the 1980s, Congress and the White House are looking to reduce the deficit and spur on economic growth, there was a very different mentality back then. For one, Congress and President Reagan were openly pushing for higher taxes, something that wouldn't fly in today's politics. Also, the Treasury Department played a crucial role in the 1980s in drafting two major proposals (Treasury I and Treasury II) that were the frameworks for the major tax code revision that went into effect in 1986.

Today, the climate is totally different. The idea of cutting benefits and raising taxes is toxic while other issues, such as immigration and the ongoing conflict in the Middle East, especially Syria, sideline the push for major tax reform. It remains to be seen if a major tax code revision will occur in the next year or so, but many analysts claim it is highly doubtful.

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