The Federal tax on corporate profits has been in effect since 1909, but controversy continues to surround the tax despite its long history. Indeed, the very existence of a corporate income tax has been questioned by some and defended by others. In the area of economic analysis, there has been a degree of uncertainty about the effects of the tax. However, economists generally agree that in the long run the tax is not borne exclusively by the owners of corporate capital, and that the tax results in a certain loss in economic efficiency. All effects aside, the size of the corporate income tax has diminished over the past 30 years. Receipts from the tax have fallen, as have the average and marginal effective tax rates.

An important business tax provision of the Tax Reform Act of 1986 is the new tax depreciation rules for business assets. The effect of the Tax Reform Act's changes was to slow down the rate at which the cost of most assets can be depreciated. Depreciation deductions are thus less valuable to businesses than under prior law. The Act's depreciation changes, along with its repeal of the investment tax credit, also increased the tax burden on depreciable assets compared to other types of investments. While the primary purpose of this report is to describe the changes in depreciation rules and their effects, the report also contains basic information on the rationale for depreciation deductions and how the deductions are calculated.,Depreciation in General -- Depreciation Under Prior Law -- Depreciation Under the Tax Reform Act -- Effect of the Tax Reform Act and the Tax Burden on Depreciable Assets -- Appendix. Depreciation Methods ; The Half-Year Convention and Recovery Periods ; Sample Depreciation Calculations Under Prior Law ; Sample Depreciation Calculations under the Tax Reform Act of 1986.,David L. Brumbaugh, Analyst in Public Finance, Econmics Division.,CRS 87-342 E,"April 16, 1987.",SuDoc# LC 14. 18/3

Estimates how that over its first five years, the Tax Reform Act of 1985 (HR 3838) would be revenue neutral, with a reduction in revenue from the individual income tax just offset by an increase in revenue from the corporate income tax. This report describes the major changes in the individual and corporate income tax systems that would produce these revenue patterns. Notwithstanding the five-year revenue estimates, the report concludes that the bill would not significantly increase the tax burden on corporate-sector income. Further, in the long-run, the bill may lose tax revenue compared to revenue that would be generated under the current tax system.,Abstract -- Introduction and Summary -- HR 3838's Effect on Tax Revenues. Aggregate Revenue Effects ; Revenues from Provisions Affecting Individuals ; HR 3838 and Revenues from the Corporate Income Tax ; Summary -- Would HR 3838 Shift the Tax Burden from Individuals to Corporations? -- The Long-Run Revenue Effect of HR 3838.,David L. Brumbaugh, Analyst in Public Finance and Gregg A. Esenwien, Economic Analyst, Economics Division.,CRS 86-586 E,"March 10, 1986.",SuDoc# 14. 18/3

The Tax Reform Act of 1986 (P.L. 99-514) was signed into law on October 22, 1986. This report provides a brief chronology of the Act, a summary of the major changes in individual and business taxation, and a side-by-side comparison of the major individual and business tax provisions of the Act as they compare to prior law. The report also includes an extensive listing of CRS products that treat many issues relating to the Tax Reform Act of 1986 in greater detail.,Chronology of the Tax Reform Act -- Major Changes in Individual Taxation -- Major Changes in Business Taxation -- Table 1: Provisions Affecting Individuals -- Table 2: Provisions Affecting Business -- Reports and Congressional Document -- Additional Reference Sources.,Stacey M. Kean, Analyst in Government Finance and David L. Brumbaugh, Analyst in Public Finance, Economics Division,CRS 87-231 E,"April 15, 1987.",SuDoc# 14. 18/3