The last major overhaul of the tax code took place when a Democratic Congress, working with Reagan, passed the Tax Reform Act of 1986. It simplified the code, decreased individual tax rates, increased corporate taxes and significantly reduced the number of exemptions, deductions, credits and loopholes. The reform also set the tax rate for capital gains at about 23 percent, which was reduced dramatically to around 15 percent as part of the Bush tax cuts.
Ever since the 1986 reform was passed, Congress has been systematically chipping away at the tax code, adding literally thousands of changes and additional tax benefits, exemptions and loopholes, junking up the tax code and making it more complicated and less fair.
“It’s out of control, says Eugene Steuerle, an Urban Institute economist. “They keep throwing junk in the tax code which adds to the deficit.”