Question

The Tax Reform Act of 1986 is famous for reducing the number of tax brackets to just two and for lowering the top statutory tax rate to just 28 percent. Which subsequent tax act first raised the top statutory tax rate above 28 percent?

Answer 1

Tax Reforms and Changes

The tax reforms act of 1986, is a law passed by the US Congress to simplify the income tax code. the reforms reduced the tax rate from 50% to 28% and raised the bottom tax rate from 11% to 15%.

The act is not change for the capital gain it is to be raised to 28% from 20% in the previous rate.

But in the tax reforms act of 1993 there is an big change in the capital gain structure raised on the various items from 28% to the 36% an increase in gasoline taxes and an additional tax of 10% on the married couple with income above $250,000.

It also raised taxes on the social security benefits and eliminated the tax on the Medicare. This will change in big way both for the individual and for the businesses.

The Tax Reforms Act of 1993 was a piece of legislation is also known as the revenue reconcilation Act of 1993. under this Act not only the individual affected but also Corporates also affected by change in the corporate tax rate.

Corporate tax rate also raised and also many other taxes increased and reduced the amount of deductions so more burden on both the individual and the corporate sector.

This changes are made due to more emphasis on the following sectors:

To promote in the Education and Training sectors help to improve future benefit and also raised the level for the future and in the growth process.

To promote the small business which produces goods at the lower level and alos help to sort the problem of unemployment in the small area. which help to reduce poverty and raised the levels of standard of living of the people of the country.

Business deduction are reduced from 80% to 50% for meals and entertainment