The Big Bob Packwood Tax Reform

The Oregon senator, who died Saturday at 93, closed loopholes and cut the top rate to 28%

By Arthur Laffer and Stephen Moore. Excerpts:

"the Tax Reform Act of 1986" [led to the] "lowering the highest personal income-tax rate—which had been 70% in 1981—to 28%. The corporate rate was slashed from 46% to 34%. The number of individual tax brackets went from 14 to two (28% and 15%)."

"nearly every Democrat voted for a 28% tax rate. Now many Democrats in Congress want to soak the rich with income tax rates as high as 50%, 60% or 70%"

"The law, on top of the 1981 Reagan tax cuts, made America a magnet for capital from around the globe. It helped launch the greatest period of wealth creation in world history over the succeeding 40 years. The Dow Jones Industrial Average closed at 1,808.35 on Oct. 22, 1986, the day Reagan signed the law. Today it is over 50,000.

Tax revenue exploded with lower tax rates. The share of taxes paid by the wealthy rose as they lost their favorite tax shelters and instead put their money to productive use. Economist Martin Feldstein, who served as chairman of the White House’s Council of Economic Advisers (1982-84), wrote on these pages in 2011 that “actual experience after 1986 showed an enormous rise in taxes paid, particularly by those who experienced the greatest reductions in marginal tax rates.”"

"nearly every other nation followed suit by slashing tax rates"