ABSTRACT
This chapter summarizes the tax law changes, indicates their magnitude at the federal level, provides information on state linkages to the federal tax system, and suggests how the tax law changes state and local revenues. On August 13, 1981, President Reagan signed the Economic Recovery Tax Act, enacted as part of the administration's domestic program. The act made changes in federal taxes on corporate profits, personal income, and gifts and estates. The amounts of gifts and estates that are exempt from taxation were increased and the tax rates on gifts and estates reduced. The act reduces individual income tax rates by 5 percent in fiscal year 1981, 10 percent in 1982, and 10 percent in 1983, for a total reduction of 23 percent by 1984. Six states and some localities specifically adopt individual income and corporate tax provisions modeled after federal tax law, rather than defining the entire state or local tax structure in terms of the federal code.
