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Constitution. Johnson v. Robison, 415 U.S. 361, 364-365 n.4
(1974); Hammond v. Lenfest, 398 F.2d 705, 709 n.6 (2d Cir. 1968).
Before considering petitioner’s constitutional arguments, we
shall summarize in pertinent part the legislative history and
provisions of section 469. On October 22, 1986, Congress enacted
section 469 into the Code in the Tax Reform Act of 1986, Pub. L.
99-514 (1986 Act or TRA 1986), sec. 501(a), 100 Stat. 2233. In
the report of the Senate Committee on Finance (Senate Finance
Committee Report) with respect to the 1986 Act, that committee
set forth the following reasons for enacting section 469:
In recent years, it has become increasingly clear
that taxpayers are losing faith in the Federal income
tax system. This loss of confidence has resulted in
large part from the interaction of two of the system’s
principal features: its high marginal rates * * *, and
the opportunities it provides for taxpayers to offset
income from one source with tax shelter deductions and
credits from another.
The prevalence of tax shelters in recent years
* * * has been well documented. * * *
Such patterns give rise to a number of undesirable
consequences, even aside from their effect in reducing
Federal tax revenues. Extensive shelter activity
contributes to public concerns that the tax system is
unfair, and to the belief that tax is paid only by the
naive and the unsophisticated. This, in turn, not only
undermines compliance, but encourages further expansion
of the tax shelter market, in many cases diverting
investment capital from productive activities to those
principally or exclusively serving tax avoidance goals.
The committee believes that the most important
sources of support for the Federal income tax system
are the average citizens who simply report their income
(typically consisting predominantly of items such as
salaries, wages, pensions, interest, and dividends) and
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