After the Reagan tax reforms of 1986 cut the top personal income tax rate from 50% to 28%, did average inflation-adjusted federal taxes per U.S. resident increase or decrease?
After the Reagan tax reforms of 1986, inflation-adjusted federal taxes per U.S. resident increased from an average of $6,958 in 1986, to $7,374 in 1987, $7,518 in 1988, and $7,696 in 1989. Reagan's 1986 tax reforms also cut the top corporate income tax rate from 46% to 34%, but tax collections still grew. This is because the economy performed well, and because these tax reforms eliminated numerous tax preferences that were used for social engineering and special interest subsidies. As a result, the average effective tax rate on the top 20% of taxpayers rose, while it decreased for all other groups. Since that time, various Congresses and Presidents have enacted more than 150 tax preferences.