Page "Reaganomics" Paragraph 11

With the Tax Reform Act of 1986, Reagan and Congress sought to raise taxes on lower incomes, eliminate many deductions, and reduce tax rates on the wealthy.

In 1983, Democrats Bill Bradley and Dick Gephardt had offered a proposal ; in 1984 Reagan had the Treasury Department produce its own plan.

The eventual bipartisan 1986 act aimed to be revenue-neutral: while it reduced the top marginal rate, it also partially " cleaned up " the tax base by curbing tax loopholes, preferences, and exceptions, thus raising the effective tax on activities previously specially favored by the code.

Ultimately, the combination of the increase in tax rates on lower incomes and decrease in deductions raised revenue equal to about 4 % of existing tax revenue.