The 1986 act reduced the number of INCOME TAX rates to two rates of 15 percent and 28 percent for most taxpayers, although a third rate of 33 percent was imposed on income within a certain upper-middle income bracket. Congress and the administration of President RONALD REAGAN believed a policy of low rates on a broad tax base would stimulate the economy.
Even President Reagan taxed the upper income brackets. Hello?
This particular legislation at first marginally improved the USA GDP, but, actually cost the GDP 0.39 percent in the third and fourth year after it was enacted into law. It was the law that had a .22 return after two years and only 0.01 percent after four.
If one recalls, the fiscal collapse of the investment banks occurred at THE END of 2008. They didn't recover until 2009. The losses were tax deductible thanks to Reagan. So, the investment banks not only bank rolled The Bailout, they cost Americans even more when they reduced their tax burden due to severe losses in 2008. In a way, Reagan provided 'the cushion' that would allow the investment banks to push the economy over the cliff to receive enough monies to restructure their debt and provided venture capital to investements outside the USA.
Bank deductions for bad debts. (click title to entry - thank you) From 1969 to 1986, for corporate income tax purposes banks could deduct from their income allocations to loan-loss reserves. The Tax Reform Act of 1986 allowed this practice to continue for banks with $400 million or less in total assets but larger banks were restricted to deducting only actual loan-loss charges during a given year.
