June 10, 1986
It is a pleasure to be with you. A few weeks ago, the word was out that tax reform was dead, loopholed to death. And today, thanks to the work of Bob Packwood, Russell Long, and some other fine Senators, we're on the edge of a fine step forward. I would like to acknowledge the core group of Senators who've committed themselves to protecting the tax bill on the Senate floor. Some of them are here this morning -- that's those fellows I was shaking hands with. Without the help and commitment of Senators Dole, Simpson, Packwood, Long, Danforth, Chafee, Wallop, Goldwater, Thurmond, Quayle, Durenberger, Warner, Bradley, Moynihan, Mitchell, Hart, Biden, Kennedy, Rockefeller, and Eagleton, this bill might soon fall prey to the special interests. I want each of you to know how grateful I am for all that you're doing to ensure that this initiative is not sidetracked and that America does indeed take this step forward.
What we do will determine what headlines are written about tax reform. Now, I know that some of you are no beginners when it comes to writing headlines. It reminds me a little bit of the cub reporter -- you knew that something would remind me of a story -- [laughter] -- cub reporter whose first solo assignment was interviewing a fellow who was just going to have a birthday that made him the oldest person in town. And he got to the address -- it was an older building out on the outskirts of the city; an elderly gentleman ushered him in. And he sat down, and the reporter determined he was the man. And he said he was there for the interview, and he led right to the matter about how old are you, and the man said, ``96.'' He said, ``To what do you attribute your longevity?'' And the fellow said, ``I don't smoke, drink, or run around with wild women.'' And at that moment there was a crash from upstairs. And the reporter looked up and he said, ``What was that?'' And the old boy said, ``Oh, that's dad, he's drunk again.'' [Laughter]
Well, if we work together, we're going to give the journalists and historians something to write about. The current tax code of the United States is an antiquated relic of a bygone era. The blatant unfairness of the code, loaded to the brim with special interest provisions, contributed to the general cynicism and economic stagnation that prevailed not so long ago. It doesn't take a Ph.D. to know something is fundamentally wrong when neighbors who earn similar incomes can easily be paying phenomenally different tax bills. And how does a corporate head feel about bearing the burden of a heavy tax load when he discovers his competition is legally paying next to nothing?
We've got a chance to clear up many of the inequities and bring down the tax rates of most Americans. And by now you know that what we're proposing is a tax code with 2 rates -- 15 and 27 percent. Eighty percent of the people will be paying either no tax or the lower rate. Maybe we should have said there are 3 brackets -- zero, 15, and 27. Most Americans will enjoy a reduction of their total tax obligation. The least fortunate will be taken off the rolls altogether. They'll be in that zero bracket.
For the business community our tax program represents a pathway to sanity. The current code is a bizarre menagerie, one that runs counter to the interests of good management and a sound economy. It encourages people to channel their resources into tax shelters rather than economy building investment. Businessmen spend too much of their time, effort, and creative genius maneuvering through the system rather than planning for efficient production, distribution, and sales. Our plan is to bring the maximum corporate rate down from 46 percent to 33 percent. At the same time, we'll be closing off many of the special tax benefits built into the system at the behest of this or that industry. We want to level off the playing field and make it fairer for those who compete within one industry and fairer for those segments of our economy which compete with each other. It wasn't a good idea for government to take sides in the first place. And I've always felt that the best thing government can do for our men and women of enterprise is to get out of their way.
Obviously, this bill will not solve all the problems, but it will be progress with a capital ``P.'' And we've come a long way in these last 5\1/2\ years. We've brought inflation and interest rates down. We turned our country away from decline and pessimism and put it on the road to growth and prosperity. But there is an old saying: If you stop moving forward, you'll start falling back. Now's the time to vigorously and energetically push ahead as never before. New horizons are just beyond our sight. We've already enjoyed 3\1/2\ years of economic growth. We can with the passage of this tax reform program catapult America into the 21st century with the same optimism and unlimited potential with which we entered the 20th century. Now, regardless of what you've heard, I wasn't around then. [Laughter]
Seriously, though, the Council of Economic Advisers suggests that this bill will add tremendous incentives and efficiencies to our economy. We could well increase our country's growth rate nearly 10 percent over the next decade, putting as much as $800 to $900 -- I'm sorry, $600 to $900 more in real income into the pockets of each household each year and creating as many as 4 million additional new jobs. These results are worth every ounce of energy that we put into tax reform. What we're doing is reaffirming the viability of our system of government. During the last decade there were some who seemed to have their doubts. Well, we've proven the naysayers wrong time and again. America works when we work.
I've had many wonderful experiences during my time in office, but the greatest thrill has been meeting and getting to know this generation out there of young Americans. I've met them on the campuses and high schools and in churches, in factories, and, just last week, at a Marine base in South Carolina. They're the best darn bunch of kids we've ever had. And what we're doing now is for them. We're going to pass on to them a free, prosperous, and secure America. That's what this is all about. And after what I've seen of them, they'll take darn good care of it when we do. Well, I thank you for all you are doing, and I certainly thank these gentlemen here behind me, these Senators, for what they're contributing to all of this and what they have brought forth.
Thank you all. God bless you.
Note: The President spoke at 11:48 a.m. in Room 450 of the Old Executive Office Building.