When Congress dramatically revamped the income-tax code in 1986, two kinds of predictions about the law's economic impact followed: Critics said the tax increases on corporations would dampen business investment. Supporters said tax reductions for individuals would stimulate consumer buying and rational financial decision-making.

The tax-revision law was approved despite intense business lobbying and many warnings that it would harm the economy. Proponents enthused about its positive effects: President Reagan said on signing it that lower tax rates and fewer loopholes would "take us into a future of technological invention and economic achievement, one that will keep America competitive and growing into the 21st century."

This year the tax-rate reductions of the Tax Reform Act of 1986 become fully effective, and predictions of both doom and boom have subsided to a mere murmur. The law that proponents and opponents said would have a powerful impact has been nearly forgotten.

For individuals, higher Social Security taxes and the fears raised by last October's stock-market crash probably will offset most of the stimulative impact of lower income-tax rates. For businesses, the rate cuts are expected to have little effect on most companies, but the worst blows from the tax-increase provisions probably have passed as well.

"The word we have been getting from our clients is that, once these changes happened in 1987, companies took it as, 'This is the way it is,' " said Priscilla Trumbull, industrial economist for The WEFA Group. "On the consumer side, once again it is going to be offset an awful lot by the stock market. I don't think we are going to see any big effects. It is if anything probably being ignored by most people."

The predictions of slight impact in 1988 do not mean the law was a failure, experts said. Instead, they mean only that it will take years for the the economy to become more efficient and productive.

"It should increase the incentives to work and save, and cheat less, but I think that all of these effects occur over a long period of time," said Joseph Pechman of the Brookings Institution, long a proponent of revising the tax system. "There are a lot of people and businesses who don't know what's going on yet."

The congressional Joint Committee on Taxation calculated in 1986 that the law, which reduced tax rates but also limited or repealed numerous deductions, would cut 1988 taxes for individuals by an average of 6.1 percent. That is considerably greater than the 1.6 percent cut for 1987, a year of transition into the new tax system. The 1988 tax cuts -- a minority of taxpayers will pay higher taxes -- showed up directly in paychecks starting in January, when withholding schedules changed.

But the congressional forecasters did not include in their calculations this year's increase in the Social Security payroll tax from 7.15 percent of salary to 7.51 percent (the employer pays the same amount). A single worker with a annual salary of $40,000, for instance, paid $2,860 in Social Security taxes last year and will pay $3,004 this year, a $144 increase.

The same worker would have had $7,229 in federal taxes withheld from his paycheck in 1987, if he took four personal exemptions, and $6,695 in 1988. That is a tax cut of $534 -- but $144 of it, or 25 percent, is lost to higher Social Security taxes.

For a single worker earning $20,000 a year, the impact is even more pronounced: He would experience a $42 income-tax increase in 1988 as a result of the rate changes (assuming he takes two exemptions), and also would pay $72 more in Social Security taxes.

Some higher-income individuals also are likely to see little reduction in their federal taxes in 1988 because the reduction in their tax rate -- the top statutory rate dropped from 38.5 percent to 28 percent -- will not fully offset the phasing-in of the law's crackdown on tax shelter losses and interest deductions, among other elements.

"It is possible to end up with a lower marginal tax rate and a higher tax bill," said economist Emil Sunley, who is with the accounting firm of Deloitte, Haskins & Sells.

However, the majority of taxpayers still will pay less in taxes in 1988, and some forecasters are predicting that the additional income will be spent. Thomas Swanstrom, chief economist for Sears Roebuck and Co., predicts an increase in Americans' disposable income of 7.3 percent in 1988, compared with a 5.1 percent increase in 1987.

And, Swanstrom said, taxpayers will get a big income boost this spring from larger-than-expected tax refunds. The new W-4 withholding forms filled out by taxpayers last year had been expected to reduce refunds by bringing taxes withheld more in line with taxes owed. But tax revenue from individuals has been running 13 percent higher this year than its 1987 levels, raising the possibility that Americans will get much of their overpayments back when they file their taxes.

Despite its tax cuts for individuals, the 1986 law did not reduce the flow of revenue into the Treasury. It paid for the personal-tax reductions with a five-year, $120-billion tax increase on business, curbing or repealing such widely used tax advantages as the investment tax credit, accelerated depreciation writeoffs for plant, equipment and real-estate and low tax rates on capital gains.

Those losses did not turn the economy toward recession in 1987, and most forecasters now pay far more attention to the trade situation, the budget deficit and the stock market in formulating their forecasts for 1988. Some industries have been hurt by the loss of tax breaks important to them -- commercial real estate often is cited as an example -- but neither the industrial nor service sectors appears to have been profoundly reshaped.

"The dire forecasts that were made about how terrible it was going to be for the business sector have not come true," Pechman said.

Even in future years, the new tax code may have a smaller-than-expected impact on economic behavior, some experts believe. The theory goes this way: For individuals and businesses to respond to the lower tax rates by abandoning tax shelters and making profit-oriented investments, they have to believe lower tax rates are going to be around for a long time. There is some evidence that the public is skeptical about that likelihood.

"I think if there is enough awareness that taxes are going to have to be raised at some future time, it is not clear whether the low rates in 1988 can have a permanent effect or just a transitory effect," said Harvey Galper, associate national director for tax analysis at the accounting firm Peat Marwick Main.

After all, as Galper and others noted, Congress could not even manage to leave the tax code alone for one year. In 1987, legislators raised taxes by $9 billion.