Tax Reform Act of 1986
The U. S. Congress passed the Tax Reform Act of 1986 to simplify the income tax code, broaden the tax base and eliminate many tax shelters. Referred to as the second of the two "Reagan tax cuts", the bill was officially sponsored by Democrats, Richard Gephardt of Missouri in the House of Representatives and Bill Bradley of New Jersey in the Senate; the Tax Reform Act of 1986 was given impetus by a detailed tax-simplification proposal from President Reagan's Treasury Department, was designed to be tax-revenue neutral because Reagan stated that he would veto any bill, not. Revenue neutrality was achieved by offsetting tax cuts for individuals by eliminating $60 billion annually in tax loopholes and shifting $24 billion of the tax burden from individuals to corporations by eliminating the investment tax credit, slowing depreciation of assets, enacting a stiff alternative minimum tax on corporations; the top tax rate for individuals for tax year 1987 was lowered from 50% to 38.5%. Many lower level tax brackets were consolidated, the upper income level of the bottom rate was increased from $5,720/year to $29,750/year.
This package consolidated tax brackets from fifteen levels of income to four levels of income. The standard deduction, personal exemption, earned income credit were expanded, resulting in the removal of six million poor Americans from the income tax roll and a reduction of income tax liability across all income levels; the higher standard deduction simplified the preparation of tax returns for many individuals. For tax year 1987, the Act provided a graduated rate structure of 11%/15%/28%/35%/38.5%. Beginning with tax year 1988, the Act provided a nominal rate structure of 15%/28%/33%. However, beginning with 1988, taxpayers having taxable income higher than a certain level were taxed at an effective rate of about 28%; this was jettisoned in the Omnibus Budget Reconciliation Act of 1990, otherwise known as the "Bush tax increase", which violated his Taxpayer Protection Pledge. The Act increased incentives favoring investment in owner-occupied housing relative to rental housing. Prior to the Act, all personal interest was deductible.
Subsequently, only home mortgage interest was deductible, including interest on home equity loans. The Act phased out many investment incentives for rental housing, through extending the depreciation period of rental property to 27.5 years from 15-19 years. It discouraged real estate investing by eliminating the deduction for passive losses. To the extent that low-income people may be more to live in rental housing than in owner-occupied housing, this provision of the Act could have had the tendency to decrease the new supply of housing accessible to low-income people; the Low-Income Housing Tax Credit was added to the Act to provide some balance and encourage investment in multifamily housing for the poor. Moreover, interest on consumer loans such as credit card debt was no longer deductible. An existing provision in the tax code, called Income Averaging, which reduced taxes for those only making a much higher salary than before, was eliminated; the Act, increased the personal exemption and standard deduction.
The Individual Retirement Account deduction was restricted. The IRA had been created as part of the Employee Retirement Income Security Act of 1974, where employees not covered by a pension plan could contribute the lesser of $1500 or 15% of earned income; the Economic Recovery Tax Act of 1981 removed the pension plan clause and raised the contribution limit to the lesser of $2000 or 100% of earned income. The 1986 Tax Reform Act retained the $2000 contribution limit, but restricted the deductibility for households that have pension plan coverage and have moderate to high incomes. Non-deductible contributions were allowed. Depreciation deductions were curtailed. Prior to ERTA, depreciation was based on "useful life" calculations provided by the Treasury Department. ERTA set up the "accelerated cost recovery system"; this set up a series of useful lives based on three years for technical equipment, five years for non-technical office equipment, ten years for industrial equipment, fifteen years for real property.
TRA86 lengthened these lives, lengthened them further for taxpayers covered by the alternative minimum tax. These latter, longer lives approximate "economic depreciation," a concept economists have used to determine the actual life of an asset relative to its economic value. Defined contribution pension contributions were curtailed; the law prior to TRA86 was that DC pension limits were the lesser of 25% of compensation or $30,000. This could be accomplished by any combination of elective deferrals and profit sharing contributions. TRA86 introduced an elective deferral limit of $7000, indexed to inflation. Since the profit sharing percentage must be uniform for all employees, this had the intended result of making more equitable contributions to 401's and other types of DC pension plans; the 1986 Tax Reform Act introduced the General Nondiscrimination rules which applied to qualified pension plans and 403 plans that for private sector employers. It did not allow such pension plans to discriminate in favor of compensated employees.
A compensated employee for the purposes of testing a plan's compliance for the 2006 plan year is any employee whose compensation exceeded $95,000 in the 2005 plan year. Therefore, all new hires are by definition nonhighly compensated employees. A plan could not give benefits or contributions on a more favorable basis for
Michigan Law Review
The Michigan Law Review is an American law review, established in 1902 and is run by law students. It is the flagship law journal of the University of Michigan Law School and one of the top law journals in the United States; the Michigan Law Review was established in 1902, after Gustavus Ohlinger, a student in the Law Department of the University of Michigan, approached the dean with a proposal for a law journal. The Michigan Law Review was intended as a forum in which the faculty of the Law Department could publish its legal scholarship; the faculty resolution creating the Michigan Law Review required every faculty member to submit two articles per year to the new journal. From its inception until 1940, the Michigan Law Review's student members worked under the direction of faculty members who served as editor-in-chief; the first of these was the last Paul Kauper. In 1940, the first student editor-in-chief was selected. During the years that followed, student editors were given increasing autonomy.
The current editor-in-chief is Megan Brown. Day-to-day production operations are overseen by Kristin Froehle. Seven of each volume's eight issues ordinarily are composed of two major parts: "Articles" by legal scholars and practitioners and "Notes" written by the student editors. One issue in each volume is devoted to book reviews. Special issues are devoted to symposia or colloquia. In 2016, PrawfsBlawg ranked the Michigan Law Review as the 6th best law journal by weighing its Google Scholar Metrics law journal ranking, US News Peer Reputation Ranking, US News Overall Ranking, the W&L Combined Ranking. Based on data from 2009 through 2016, Washington and Lee University School of Law ranked the Michigan Law Review as the 7th best law journal. According to Google Scholar Metrics, the Michigan Law Review was the 7th best law journal in 2015 and the 6th best law journal in 2014. According to Washington and Lee University School of Law's Law Library, the Michigan Law Review is the 7th most cited law journal in academic works, being cited in journals 3888 times between 2009 and 2016, the 6th most cited law journal by courts, being cited in 128 cases between 2009 and 2016.
As of 2012, the Michigan Law Review has published 4 of the 100 most cited law journal articles of all time—the 5th highest of any law journal. Of the 95 articles that constitute the 5 most cited law journal articles from each year between 1991 and 2009, 9 of them were published by the Michigan Law Review—the 5th most of any law journal. Fairlie, John A.. "Administrative Legislation". Michigan Law Review. Michigan Law Review, Vol. 18, No. 3. 18: 181–200. Doi:10.2307/1277269. JSTOR 1277269. Prosser, William L.. "Intentional Infliction of Mental Suffering: A New Tort". Michigan Law Review. Michigan Law Review, Vol. 37, No. 6. 37: 874–892. Doi:10.2307/1282744. JSTOR 1282744. Dawson, John P.. "Economic Duress—An Essay in Perspective". Michigan Law Review. Michigan Law Review, Vol. 45, No. 3. 45: 253–290. Doi:10.2307/1283644. JSTOR 1283644. Estep, Samuel D.. "Radiation Injuries and Statistics: The Need for a New Approach to Injury Litigation". Michigan Law Review. Michigan Law Review, Vol. 59, No. 2. 59: 259–304. Doi:10.2307/1286328.
JSTOR 1286328. Sax, Joseph L.. "The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention". Michigan Law Review. Michigan Law Review, Vol. 68, No. 3. 68: 471–566. Doi:10.2307/1287556. JSTOR 1287556. Lempert, Richard O.. "Modeling Relevance". Michigan Law Review. Michigan Law Review, Vol. 75, No. 5/6. 75: 1021–1057. Doi:10.2307/1288024. JSTOR 1288024. Braithwaite, John. "Enforced Self-Regulation: A New Strategy for Corporate Crime Control". Michigan Law Review. Michigan Law Review, Vol. 80, No. 7. 80: 1466–1507. Doi:10.2307/1288556. JSTOR 1288556. Ulen, Thomas S.. "The Efficiency of Specific Performance: Toward a Unified Theory of Contract Remedies". Michigan Law Review. Michigan Law Review, Vol. 83, No. 2. 83: 341–403. Doi:10.2307/1288569. JSTOR 1288569. Matsuda, Mari J.. "Public Response to Racist Speech: Considering the Victim's Story". Michigan Law Review. Michigan Law Review, Vol. 87, No. 8. 87: 2320–2381. Doi:10.2307/1289306. JSTOR 1289306. Delgado, Richard. "Storytelling for Oppositionists and Others: A Plea for Narrative".
Michigan Law Review. Michigan Law Review, Vol. 87, No. 8. 87: 2411–2441. Doi:10.2307/1289308. JSTOR 1289308. Sunstein, Cass R.. "Revitalizing Environmental Federalism". Michigan Law Review. Michigan Law Review, Vol. 95, No. 3. 95: 570–653. Doi:10.2307/1290162. JSTOR 1290162. Edwards, Harry T.. "What's Standing After Lujan? Of Citizen Suits, "Injuries," and Article III". Michigan Law Review. Michigan Law Review, Vol. 91, No. 2. 91: 163–236. Doi:10.2307/1289685. JSTOR 1289685. Esty, Daniel C.. "Revitalizing Environmental Federalism". Michigan Law Review. Michigan Law Review, Vol. 95, No. 3. 95: 570–653. Doi:10.2307/1290162. JSTOR 1290162. McAdams, Richard H.. "The Origin and Regulation of Norms". Michigan Law Review. Michigan Law Review, Vol. 96, No. 2. 96: 338–433. Doi:10.2307/1290070. JSTOR 1290070. Stuntz, William J.. "The Pathological Politics of Criminal Law". Michigan Law Review. Michigan Law Review, Vol. 100, No. 3. 100: 505–600. Doi:10.2307/1290411. JSTOR 1290411; the Michigan Raw Review, a parody of the Michigan Law Review, was published annually by the Barristers Society, a self-styled honorary at the University of Michigan Law School.
The Raw Review used the same cover and typeface, but contained content dissimilar, leaning to the "insulting and semi-pornogr
Revenue Act of 1926
The United States Revenue Act of 1926, 44 Stat. 9, reduced inheritance and personal income taxes, cancelled many excise imposts, eliminated the gift tax and ended public access to federal income tax returns. Passed by the 69th Congress, it was signed into law by President Calvin Coolidge; the act was applicable to incomes for 1925 and thereafter. A rate of 13.5 percent was levied on the net income of corporations. A normal tax and a surtax were levied against the net income of individuals as shown in the following table. Exemption of $1,500 for single filers and $3,500 for married couples and heads of family. A $400 exemption for each dependent under 18
An income tax is a tax imposed on individuals or entities that varies with respective income or profits. Income tax is computed as the product of a tax rate times taxable income. Taxation rates may vary by type or characteristics of the taxpayer; the tax rate may increase as taxable income increases. The tax imposed on companies is known as corporate tax and is levied at a flat rate. However, individuals are taxed at various rates according to the band. Further, the partnership firms are taxed at flat rate. Most jurisdictions exempt locally organized charitable organizations from tax. Capital gains may be taxed at different rates than other income. Credits of various sorts may be allowed that reduce tax; some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income. Taxable income of taxpayers resident in the jurisdiction is total income less income producing expenses and other deductions. Only net gain from sale of property, including goods held for sale, is included in income.
Income of a corporation's shareholders includes distributions of profits from the corporation. Deductions include all income producing or business expenses including an allowance for recovery of costs of business assets. Many jurisdictions allow notional deductions for individuals, may allow deduction of some personal expenses. Most jurisdictions either do not tax income earned outside the jurisdiction or allow a credit for taxes paid to other jurisdictions on such income. Nonresidents are taxed only on certain types of income from sources within the jurisdictions, with few exceptions. Most jurisdictions require self-assessment of the tax and require payers of some types of income to withhold tax from those payments. Advance payments of tax by taxpayers may be required. Taxpayers not timely paying tax owed are subject to significant penalties, which may include jail for individuals or revocation of an entity's legal existence; the concept of taxing income is a modern innovation and presupposes several things: a money economy, reasonably accurate accounts, a common understanding of receipts and profits, an orderly society with reliable records.
For most of the history of civilization, these preconditions did not exist, taxes were based on other factors. Taxes on wealth, social position, ownership of the means of production were all common. Practices such as tithing, or an offering of first fruits, existed from ancient times, can be regarded as a precursor of the income tax, but they lacked precision and were not based on a concept of net increase; the first income tax is attributed to Egypt. In the early days of the Roman Republic, public taxes consisted of modest assessments on owned wealth and property; the tax rate under normal circumstances was 1% and sometimes would climb as high as 3% in situations such as war. These modest taxes were levied against land and other real estate, animals, personal items and monetary wealth; the more a person had in property, the more tax they paid. Taxes were collected from individuals. In the year 10 AD, Emperor Wang Mang of the Xin Dynasty instituted an unprecedented income tax, at the rate of 10 percent of profits, for professionals and skilled labor.
He was overthrown 13 years in 23 AD and earlier policies were restored during the reestablished Han Dynasty which followed. One of the first recorded taxes on income was the Saladin tithe introduced by Henry II in 1188 to raise money for the Third Crusade; the tithe demanded that each layperson in England and Wales be taxed one tenth of their personal income and moveable property. The inception date of the modern income tax is accepted as 1799, at the suggestion of Henry Beeke, the future Dean of Bristol; this income tax was introduced into Great Britain by Prime Minister William Pitt the Younger in his budget of December 1798, to pay for weapons and equipment for the French Revolutionary War. Pitt's new graduated income tax began at a levy of 2 old pence in the pound on incomes over £60, increased up to a maximum of 2 shillings in the pound on incomes of over £200. Pitt hoped that the new income tax would raise £10 million a year, but actual receipts for 1799 totalled only a little over £6 million.
Pitt's income tax was levied from 1799 to 1802, when it was abolished by Henry Addington during the Peace of Amiens. Addington had taken over as prime minister in 1801, after Pitt's resignation over Catholic Emancipation; the income tax was reintroduced by Addington in 1803 when hostilities with France recommenced, but it was again abolished in 1816, one year after the Battle of Waterloo. Opponents of the tax, who thought it should only be used to finance wars, wanted all records of the tax destroyed along with its repeal. Records were publicly burned by the Chancellor of the Exchequer, but copies were retained in the basement of the tax court. In the United Kingdom of Great Britain and Ireland, income tax was reintroduced by Sir Robert Peel by the Income Tax Act 1842. Peel, as a Conservative, had opposed income tax in the 1841 general election, but a growing budget deficit required a new source of funds; the new income tax, based on Addington's model, was imposed on incomes above £150. Although this measure was intended to be temporary, it soon became a fixture of the British taxation system.
A committee was formed in 1851 under Joseph Hume to investigate the matter, but failed to reach a clear recommendation. Despite the vociferous objection, William Gladstone, Chancellor of the Exchequer from 1852, kept the prog
Revenue Act of 1924
The United States Revenue Act of 1924 known as the Mellon tax bill cut federal tax rates and established the U. S. Board of Tax Appeals, renamed the United States Tax Court in 1942; the bill was named after U. S. Secretary of the Treasury Andrew Mellon; the Revenue Act was applicable to incomes for 1924. The bottom rate, on income under $4,000, fell from 1.5% to 1.125%. A parallel act, the Indian Citizenship Act of 1924, granted all non-citizen resident Indians citizenship, thus the Revenue Act declared that there were no longer any "Indians, not taxed" to be not counted for purposes of United States Congressional apportionment. President Calvin Coolidge signed the bill into law. Both a normal Tax and a surtax were levied against the net income of individuals, as shown in the following table: Exemption of $1,000 for single filers and $2,500 for married couples and heads of family. A $400 exemption for each dependent under 18
Tax Relief and Health Care Act of 2006
The Tax Relief and Health Care Act of 2006, includes a package of tax extenders, provisions affecting health savings accounts and other provisions in the United States. The Act retroactively extended for two years certain provisions that had expired at the end of 2005, including: Above the line deduction for qualified tuition and higher education expenses Elective itemized deduction for state and local general sales taxes Research credit For tax years ending after December 31, 2006, the Act modifies the rules for calculating the research credit: it increases the rates of the alternative incremental credit and creates a new alternative simplified credit Work opportunity tax credit, welfare-to-work tax credit Tax credit for Qualified Zone Academy Bonds Up to $250 above-the-line deduction for certain expenses of elementary and secondary school teachers Expensing of brownfields remediation costs Tax incentives for investment in Washington, DC Indian employment tax credit Accelerated depreciation for business property on Indian reservations Fifteen-year depreciation for qualified leasehold improvements and qualified restaurant property Enhanced charitable deductions—for corporate donations of scientific property used for research, of computer technology and equipment Archer medical savings accounts Suspension of the taxable income limit on percentage depletion for oil and natural gas produced from marginal propertiesIn addition, the Act extended certain provisions that would otherwise expire at the end of 2006, including: Election to treat combat pay as earned income for purposes of calculating the earned income credit Provisions affecting IRS disclosure of certain tax return informationThe Act extended the new markets tax credit through the end of 2008 and requires that future regulations ensure that non-metropolitan counties receive a proportional allocation of qualified entity investments.
The Act extended through December 31, 2008, numerous energy provisions that would otherwise have expired at the end of 2007, including: Tax credit for electricity produced from certain renewable resources Authority to issue clean renewable energy bonds Deduction for energy-efficient commercial buildings Tax credit for new energy-efficient homes Tax credit for residential energy-efficient property Several provisions affect health savings accounts, including provisions dealing with limitations on HSA contributions and tax-free rollovers to HSAs from health reimbursement accounts, flexible spending accounts and individual retirement accounts. Other provisions include: Expansion of the Section 199 domestic production activity deduction to income from Puerto Rico, if all Puerto Rican receipts are subject to federal income tax A refundable credit of 20 percent of the long-term unused alternative minimum tax credits per year for the next five years, subject to certain limitations and phaseouts Enhancing reporting requirements for the exercise of incentive stock options and employee stock purchase plans Reform and expansion of whistleblower awards to certain individuals who provide information regarding violations of the tax laws An increase of the penalty for frivolous tax submissions from $500 to $5,000 and an extension of the scope of the penalty A temporary itemized deduction for qualified mortgage insurance premiums accrued during 2007, subject to limitations and phase-out Increased information sharing between the IRS and certain regional governmental organizations Charitable remainder trusts having unrelated business taxable income are subjected to an excise tax equal to 100% of unrelated business taxable income A technical correction to the Subpart F look-through rule under the Tax Increase Prevention and Reconciliation Act of 2005 Clarifying that the Tax Court has jurisdiction to review requests for equitable innocent spouse relief Expanding the Medicare Recovery Audit Contractor program to all 50 states and making it permanent Ordering the completion without delay of the All-American Canal Lining Project and identifying a 1944 treaty between the US and Mexico as the exclusive authority concerning the impacts of projects constructed within US territory on foreign territoriesThe Act makes permanent certain provisions that were included as temporary provisions in the Tax Increase Prevention and Reconciliation Act of 2005 and were otherwise scheduled to expire after 2010, including: Federal income tax exemption of certain qualified settlement funds established to resolve CERCLA claims "Separate affiliated group" rule for satisfaction of active trade or business requirement under Section 355 Election to treat self-created musical works as capital assets Exemption from imputed interest rules for certain loans to qualified continuing care facilities CRS Report in the public domain H.
R. 6111, Legislative History
Revenue Act of 1913
The Revenue Act of 1913 known as the Underwood Tariff or the Underwood-Simmons Act, re-established a federal income tax in the United States and lowered tariff rates. The act was sponsored by Representative Oscar Underwood, passed by the 63rd United States Congress, signed into law by President Woodrow Wilson. Wilson and other members of the Democratic Party had long seen high tariffs as equivalent to unfair taxes on consumers, tariff reduction was President Wilson's first priority upon taking office. Following the ratification of the Sixteenth Amendment in 1913, Democratic leaders agreed to seek passage of a major bill that would lower tariffs and implement an income tax. Underwood shepherded the revenue bill through the House of Representatives, but the bill won approval in the United States Senate only after extensive lobbying by the Wilson administration. Wilson signed the bill into law on October 3, 1913; the Revenue Act of 1913 lowered average tariff rates from 40 percent to 26 percent.
It established a one percent tax on income above $3,000 per year. A separate provision established a corporate tax of one percent, superseding a previous tax that had only applied to corporations with net incomes greater than $5,000 per year. Though a Republican-controlled Congress would raise tariff rates, the Revenue Act of 1913 marked an important shift in federal revenue policy, as government revenue would rely on income taxes rather than tariff duties. Democrats had long seen high tariff rates as equivalent to unfair taxes on consumers, tariff reduction was President Wilson's first priority upon taking office, he argued that the system of high tariffs "cuts us off from our proper part in the commerce of the world, violates the just principles of taxation, makes the government a facile instrument in the hands of private interests." While most Democrats were united behind a decrease in tariff rates, most Republicans held that high tariff rates were useful for protecting domestic manufacturing and factory workers against foreign competition.
Shortly before Wilson took office, the Sixteenth Amendment, proposed by Congress in 1909 during a debate over tariff legislation, was ratified by the requisite number of states. Following the ratification of the Sixteenth Amendment, Democratic leaders agreed to attach an income tax provision to their tariff reduction bill to make up for lost revenue, to shift the burden of funding the government towards the high earners that would be subject to the income tax. By late May 1913, House Majority Leader Oscar Underwood had passed a bill in the House that cut the average tariff rate by 10 percent. Underwood's bill, which represented the largest downward revision of the tariff since the Civil War, aggressively cut rates for raw materials, goods deemed to be "necessities," and products produced domestically by trusts, but it retained higher tariff rates for luxury goods; the bill instituted a tax on personal income above $4,000. Passage of Underwood's tariff bill in the Senate would prove more difficult than in the House because some Southern and Western Democrats favored the continued protection of the wool and sugar industries, because Democrats had a narrower majority in that chamber.
Seeking to marshal support for the tariff bill, Wilson met extensively with Democratic senators and appealed directly to the people through the press. After weeks of hearings and debate and Secretary of State William Jennings Bryan managed to unite Senate Democrats behind the bill; the Senate voted 44 to 37 in favor of the bill, with only one Democrat voting against it and only one Republican, progressive leader Robert M. La Follette Sr. voting for it. Wilson signed the Revenue Act of 1913 into law on October 3, 1913; the Revenue Act of 1913 reduced the average import tariff rates from 40 percent to 26 percent. The Act established the lowest rates since the Walker Tariff of 1857. Most schedules were a percentage of the value of the item; the duty on woolens went from 56% to 18.5%. Steel rails, raw wool, iron ore, agricultural implements now had zero rates; the reciprocity program wanted by the Republicans was eliminated. Congress rejected proposals for a tariff board to fix rates scientifically, but it set up a study commission.
The Underwood-Simmons measure vastly increased the free list, adding woolens, steel, farm machinery, many raw materials and foodstuffs. The average rate was 26%; the Revenue Act of 1913 restored a federal income tax for the first time since 1872. The federal government had adopted an income tax in the Wilson–Gorman Tariff Act, but that tax had been struck down by the Supreme Court in the case of Pollock v. Farmers' Loan & Trust Co; the Revenue Act of 1913 imposed a one percent tax on incomes above $3,000, with a top tax rate of six percent on those earning more than $500,000 per year. Three percent of the population was subject to the income tax; the bill included a one percent tax on the net income of all corporations, superseding a previous federal tax that had only applied to corporate net incomes above $5,000. The Supreme Court upheld the constitutionality of the income tax in the cases of Brushaber v. Union Pacific Railroad Co. and Stanton v. Baltic Mining Co. A normal income tax and an additional tax were levied against the net income of individuals, as shown in the following table: There was an exemption of $3,000 for single filers and $4,000 for married couples.
Therefore, the 1% bottom marginal rate applied only to the first $17,000 of income for single filers or the first $16,000 ($352,300 in