Economic Recovery Tax Act of 1981

In Congress, "Bill" was a member of the U.S. House Ways and Means Committee, during the 95th through the 101st U.S. Congress, and was closely involved in many successful legislative efforts. One effort was the original sponsorship of the bill providing the income tax indexing clause that was later inserted into President Reagan's famous tax reduction bill of 1981, called The Economic Recovery Tax Act of 1981. This indexing made it so that income tax brackets would automatically be moved up as the inflation rate rose, so that "bracket creep" would be avoided, whereby income tax rates rise only because of inflation, not because of a rise in deflated income levels.^[2] This addition to the 1981 tax bill was very popular, as indicated by its co-sponsorship by a majority of members of the U.S. House of Representatives (sponsorship by a majority of members indicates the bill would be passed if put up for a vote on the House floor).

Indexing of taxes became a part of a substitute tax bill, backed by President Reagan in a July 27, 1981 evening address to the nation, and known as the Conable-Hance Substitute Tax Bill, H.R. 4260. Instead of the one year tax cut bill sponsored by Ways and Means Chairman Dan Rostenkowski, or the two-year tax cut bill sponsored by the Senate Finance Committee Chair Bob Dole, the substitute bill was a three-year 25 percent tax cut, with federal estate tax relief and the indexing of tax rates to prevent bracket creep beginning in 1985. And this substitute bill became The Economic Recovery Tax Act of 1981. It was followed by years of widespread tax elusion efforts which eventually triggered legislative countermeasures.^[3]

Social Security Reform Act of 1983

Gradison also served as ranking Republican of the Ways and Means Subcommittee on Social Security during the Social Security system reform of the early 1980s, and in particular when the Social Security Reform Act of 1983 was passed into law. Included in the 1983 reform act were provisions that Gradison had originated as U.S. Bills. One such provision mandated the computerization of the death certificates of Social Security beneficiaries in order to avoid fraudulent continued payment of benefits when the beneficiary was already deceased. And another such provision included in the 1983 reform act, which was first introduced by Gradison as a U.S. House Bill, was to place the Social Security Trust Funds "off-budget", out of the general Treasury revenue budget, in order to avoid politicizing the reform process of the Social Security system.

Tax Reform Act of 1984

Bill Gradison was also involved in the next major tax reform effort, of 1984. He sponsored a bill that clarified how non-statutory fringe benefits should be treated by the Internal Revenue Service (IRS), in terms of how the IRS should issue regulations on fringe benefits. At the time this was so controversial that Congress had initiated several consecutive moratoriums on the IRS that prohibited them from issuing such fringe benefit regulations. This Congressional clarification of what non-statutory fringe benefits should be taxed, through regulations written by the IRS, was passed into law as a major part of The Tax Reform Act of 1984. It included measures such as the granting of specific tax exemptions for many commonly used fringe benefits.

Tax Reform Act of 1986

Gradison was also involved in parts of the 1986 tax reform legislation. He requested a study by the Joint Committee on Taxation on how far corporate tax rates could be reduced, in a revenue neutral fashion, if the 10% investment tax credit were eliminated. They reported that the top corporate tax rate could fall from 46% to 39%, while eliminating the investment tax credit, and still keep total revenue unchanged. This elimination of the 10% investment tax credit was then included in both the House and Senate versions of the bills that became the Tax Reform Act of 1986, which reduced top corporate tax rates to 34%.