Tax Reform Act of 1986

He's written a, a number of books on capitalism and the market.

As a progressive, although I'm not sure he's anti-capitalist as such, focuses in his review on the Tax Reform Act of 1986.

How central is this, uh, Eric, in the emergence of your everywhere millionaires? And, and does it suggest that the Reform Act of, of 1986 was a success or a failure? Tell us who passed this act and what was the thinking behind it.

The 1986 tax reform, I like to think of the, of the tax code as a house that depreciates over time and needs repairs.

So in 1986 – Well, earlier in the 80s, they also were bringing rates down.

But in 1986, there was the Tax Reform Act of 1986.

And that, for the first time, brought individual rates down enough to where it was lower than the traditional corporate tax rate.

So all of a sudden, you have people who want to own businesses or start new businesses realizing that it's much more attractive to do this pass-through form rather than a traditional corporation because...

Cut taxes on the rich and on corporations, and they'll invest that money right back into the economy, creating jobs and wages that will trickle down to everybody else.

Five years later, Reagan did it again and doubled down by signing the Tax Reform Act of 1986, which then cut the top rate from 50% to 28%, which is the lowest it had been since before the Great Depression.

And as we know now, nothing trickled down.

it just poured up in 1980 the top four percent of taxpayers earned just as much as the bottom 39 percent combined by 2019 the top four percent earned as much as the bottom 57 percent the top 10 percent of americans now hold three times the wealth of everyone else in the country combined and crucially the growth that did happen accrued to capital not labor It accrued to stock market and asset ownership, not to paychecks.

Oh, is it going to go down in history this way? Yes.

Would I like to be remembered for the author of the Tax Reform Act? You bet.

Would I like to be remembered for saving Hell's Canyon, that great gorge between Oregon and Idaho? You bet.

But I understand...

And that's not just a hypothetical.

In the decades leading up to the Tax Reform Act of 1986, the proliferation of tax shelters was rampant.

I've read about this, like doctors and lawyers buying into weird partnerships.

Exactly.