Tough times living with tax reform: business is wrestling with confusion over last year's sweeping tax changes

• Published in: Fortune Vol. 116; no. 11; p. 113
• Main Authors: Labich, Kenneth, Prewitt, Edward
• Format: Magazine Article
• Language: English
• Published: New York Time Incorporated 09-11-1987
• Subjects: Business & industry; Corporate income tax; Effects; Financial counseling; Income taxes; Investment tax credits; Personal finance; Reforms; Tax reform; Tax Reform Act 1986-US; Tax regulations; Taxation
• ISSN: 0015-8259

Businesses are only beginning to deal with the profound changes brought about by the Tax Reform Act of 1986, and companies of all types are trying to deal with much higher tax bills. Many businessmen, including Robert E. Mercer, chief executive of Goodyear, insist that the law will stifle investment and productivity growth. However, John H. Bryan of Sara Lee argues that the changes will promote economic growth because the investment tax credit that Congress eliminated had been distorting capital allocations. Companies are running into many unpleasant surprises, such as a stiffer minimum tax, as they adapt to new rules. Much more work is involved in financial planning, but the new law does have its backers including John A. Young, chief executive of Hewlett-Packard. His firm benefits more than some, since it relies less on investment credits and accelerated depreciation than big capital-goods producers do.