Radio Address to the Nation on Tax Reform
May 10, 1986
My fellow Americans:
Just about a year ago I went on national television to speak of a great national endeavor for our future, an effort by all of us to give the words freedom, fairness, and hope new meaning and power for every man and woman in America. I spoke to you about what we must do to transform a tax system, rotting from unfairness and complexity, a source of unending resentment and enmity, into one that is clear, simple, and fair for all, a system that could no longer run roughshod over Main Street America, but would ensure your families and firms incentives and rewards for hard work and risk-taking in an American future of strong economic growth.
Death and taxes may be inevitable, but unjust taxes are not. And so we proposed, as our number-one domestic priority, a radical reform to simplify the tax system and lower your tax rates, clear out the clutter of special provisions, free ourselves from the grip of special interests, and create a binding commitment to the only special interest that counts: you, the people who pay America's bills. All of us -- our White House team, Jim Baker's at Treasury, and everyone else in the administration -- have fought hard to get tax reform passed into law.
But from day one the Washington establishment has been firing its big guns trying to shoot tax reform down. According to these experts, we never had a chance. If you listen to conventional wisdom here, to the wisdom of Washington's most influential lobbyist and insiders, tax reform was never more than a pipedream. Less than 1 month ago we were told that tax reform is dead. Well, just in case you missed one of the headlines last week, it read: ``Sudden twists in tax bill's course leave lobbyists stunned, bewildered.'' What happened? The people won, that's what happened. Well, they may not have won quite yet; but thanks to heroic work of Senator Bob Packwood, members of his finance committee, our administration, and you, the political entrepreneurs have just won a magnificent first victory over the stagnating forces of the status quo.
America today stands poised to lift off into a new age of opportunity powered by one of the most exciting economic changes of my lifetime. Passed by an overwhelming 20 to 0 bipartisan vote, this proposal is really radical in scope. It dramatically simplifies the entire tax rate structure and reduces personal income tax rates to their lowest levels in over half a century. There will be only two simple rates: 15 and 27 percent. Over 80 percent of all Americans will pay a tax rate of 15 percent or less. In addition, the Finance Committee proposal will raise the personal and dependents' exemption to $2,000 for all middle- and low-income Americans. It will remove 6 million working poor from the tax rolls all together. That's right, I said 6 million.
It will sweep into the trash bins of our past literally scores of unfair, unwise, unproductive tax shelters. It will make business decisions depend on economic merits rather than on tax considerations. And it will make America more competitive in world markets. Finally, the proposal will make an enormous contribution toward tax fairness by providing for a minimum tax of 20 percent on certain items of tax preference. In this way, we can be sure that all individuals and corporations finally pay their fair share. Of course, this bill is not perfect. But several months ago I wrote several Members of the House specifying the conditions that must be met for my support. This bill meets those conditions. As far as I'm concerned, it's a giant step forward.
My Council of Economic Advisers believes that the Senate finance bill is progrowth and pro-opportunity. They estimate that added incentives and efficiencies could increase America's growth rate nearly 10 percent over the next decade. That could mean as much as $600 to $900 more income per household each year. Jobs could rise an additional 4 million over that period. That's why I'm asking Republicans and Democrats to unite to move this legislation through Congress as fast as possible, so you, the people, can set the stage to make America the world's economic superstar through the nineties and the year 2000. As I seem to remember saying once before: Let's go for it!
Until next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from Camp David, MD.