From The Heritage Foundation and the Mercatus Center;
by Jason J. Fichtner, Jacob Feldman
Mercatus Center
November 15, 2011
Working Paper Series
The 1986 Tax Reform Act (TRA86) sought to promote greater efficiency, equity, and simplicity in the tax code. However, TRA86 eliminated only the most politically vulnerable tax expenditures while retaining the tax expenditures with the most vehement political support and greatest economic cost: exclusion of employer-provided health insurance and pension benefits and the home mortgage-interest deduction. Today, unchecked tax expenditures obscure honest public-policy conversations about the size of government. Even a tax system that allows for only a few substantial tax expenditures keeps the door open for high annual compliance costs as taxpayers continue to seek professional assistance to reduce tax liabilities.
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