The Tax Reform Act of 1986 and the Progressivity of the Individual income Tax

Abstract

The Tax Reform Act of 1986 instituted some of the most dramatic revisions of the federal income tax since its inception. The primary purpose of this article is to examine the impact of the changes incorporated in TRA86 on the progressivity of the federal individual income tax. Structural and distributional indices were used to measure progressivity. Estimates of these indices were derived using seemingly unrelated regressions and data from the 1984 Individual Tax Model. The results indicate that when progresscvity is measured locally, determination of which system is more progressive varies as income rises.