Final answer:
The Tax Cuts and Jobs Act of 2017 established a new flat corporate tax rate, replacing the previous graduated rate structure. The historical contribution of the corporate income tax to federal revenue has decreased over time, falling from about 4% of GDP in the 1960s to 1% to 2% of GDP in recent decades.
Step-by-step explanation:
The Tax Cuts and Jobs Act (TCJA) of 2017 established a new, flat corporate tax rate for corporations. Prior to the TCJA, the corporate tax structure had a graduated tax rate that varied by income level, similar to individual income tax brackets. This rate structure imposed a 34% tax rate on incomes ranging from $335,000 to $10,000,000, and it then increased to a flat rate of 35% for incomes above $18,333,333. However, following the enactment of the TCJA, the corporate tax rate was simplified to a single flat rate, which differed from these previous rates.
Historically, the portion of federal revenue derived from the corporate income tax has decreased over time. From approximately 4% of the Gross Domestic Product (GDP) in the 1960s, it has diminished to an average of 1% to 2% of GDP in the most recent decades.
The Tax Reform Act of 1986 was another significant piece of legislation that reformed the tax code by reducing top tax rates for wealthy individuals and addressed corporate tax as well. While the TCJA is the more recent legislation affecting corporate taxes, understanding the historical context of tax reform, including the Tax Reform Act of 1986, helps illuminate the evolution of the tax code over time.