U.s. And Swedish Trends In Tax Reform :: essays research papers

U.S. and Swedish Trends in Tax Reform     Tax reform has become a major governmental policy trim back in the UnitedStates as well as in the rest of the world. Countries are attempting to balanceboth economic efficiency and provide equity in taxation. Governments arelooking to rewrite tax codes to minimize their impact on economic harvesting.Specifically, governments throughout the world are attempting to preserveincentives built into taxation to maximise economic efficiency. At the sametime, these governments are trying to cope with the growth in social welfareprograms throughout the past three decades. In this piece I shall discuss twonations which dramatically overhauled their tax systems, and whether or nottheir goals with tax reform were achieved.     In the article "The tax reform act of 1986 Did congress love it orleave it?", Randall Weiss discusses the attitudes about taxes in the UnitedStates. He details the events and at titudes leading to the Tax Reform Act of1986, and shows how public perception about taxes has changed since then. Healso discusses some of the tax reform proposals that are now currently beingthought about in coition.     In 1986 the United States Congress enacted the Tax Reform Act (TRA-86).The act passed with a great deal of bipartisan support. This support was madepossible by two features of the act. The first was that federal official income taxrates were to be cut dramatically. While this would lead one to believe thatfederal government receipts were cut substantially as well, it was the countenanceimportant feature of the bill that allowed it to be revenue neutral. Thisfeature was that the bill was to improve horizontal equity in the tax system.This would be accomplished by eliminating many of the deductions that manyindividuals, particularly the well to do, were allowed to make.     Many of the complains about the tax system in the Un ited States thatpreceded the Tax Reform Act were about the bring in horizontal inequities that itallowed. A great deal of press preceding TRA-86 showed the public how many ofthe countrys wealthiest individuals were able to get away with paying little orno federal income tax. Eliminating many of these tax deductions and loopholeshad been the goal of several liberal Democrats for some time. In addition,conservatives in Congress wanted to reduce the escalating federal budget famineat the time. Also, a prevailing attitude of the time was that reducing marginaltax rates would benefit the economy. It was believed that specific tax breaksand deductions to support economic growth would not be needed with the greatlyreduced tax rates.