The 1986 tax reform represented a major revamping of the United States tax code. It reflected years of ideological and technical debate; and was considered to offer the most efficient tax structure feasible, given the political constraints facing the legislature at that time. However, even before...

TRA86 removed the deductibility of state and local sales taxes from U.S. personal income taxes. This effectively increased the price to state governments of sales tax revenue relative to income tax revenues. This implies that state reliance on income taxes relative to sales taxes should have...