THE TAX REFORM ACT OF 1986: CONCENTRATED COSTS, DIFFUSE BENEFITS—AN INVERSION OF PUBLIC CHOICE

The public choice paradigm asserts the superior force of concentrated benefits over diffuse costs in the political marketplace. Vote-seeking politicians exchange favors for support to members of special interest groups, whereas the public at large places fewer demands on and have less clout with politicians. The historical evolution of the federal income tax fits the public choice paradigm. Each provision in the tax code benefits primarily a narrow interest. Little incentive exists for anyone to represent such general interests as a broad-based, low-rate, simple tax system.
The Tax Reform Act of 1986 inverted the public choice paradigm. The general interest, in the form of lower tax rates, prevailed over legions of special interests—which lost their prized deductions. The reason for this inversion lay in the power of an idea—the political and economic appeal of a low top rate. Deductions were simply worth less at lower deductible rates, and the benefits of higher after-tax income were readily apparent. A coalition of liberals seeking the abolition of special breaks for the rich and conservatives favoring the enhanced incentives in sharply lower tax rates together defeated the community of special interest groups.     

George R. Husband: Contributions to the Development of Accounting Thought

George R. Husband, accounting educator, was a leader in research, service and teaching. His former students and admirers endowed a chair, three scholarships and an annual lecture series in his memory nearly forty years after his death in 1958. This article highlights his lasting accomplishments by examining his research (e.g., as an opponent of the LIFO method of inventory valuation, an advocate of price-level accounting and major proponent of the proprietary theory of financial accounting, and as one of the most prolific authors in The Accounting Review ), service (e.g., as Vice President and President of the American Accounting Association) and teaching. We also discuss Husband's research in the context of other notable contemporary scholars and those whose works are consistent with Husband's thoughts.