September 5, 1985
The President. Thank you, Governor Martin. Thank you, Lieutenant Governor Jordan, Senator Helms, Congressmen Cobey, Broyhill, McMillan, and Coble, and Chancellor Poulton, all the members of the administration and the faculty, and you, the students, and my fraternity brothers. I think the first thing I'm going to do is pull rank. And I believe that I can dictate the uniform of the day, and out of sympathy for all these distinguished guests here on the platform, I'm changing the uniform of the day.
[At this point, the President removed his jacket.]
Well, it is great to be here with all of you at North Carolina State. Matter of fact, nothing could be finer than to be in Caro- lina in the morning. Last time that I was in North Carolina was about a year ago in the middle of the campaign. And may I tell you that my warmest and happiest memory of that campaign is of young people, college students like yourselves, who came to our campaign rallies. It wasn't always this way, and your generation is something special. You are the future of America. You're urging this country on toward a vision of optimism, hope, and prosperity. And I've come here today to seek your support, because with your support we can make that vision real.
We have before the Congress a plan that would completely overhaul our nation's tax code, knocking down the barriers to achievement and making America's future as big and open and bright as our dreams. It's a good plan, a fair plan that helps families and spurs economic growth. It will mean more jobs, bigger paychecks, and smaller taxes for those who now pay too much. And it will give America a powerful boost ahead in the world competition. Somehow, I just had a sneaky idea that you've been thinking a little bit about the America that you'll meet, diploma in hand, and figure an America with a fair tax plan that lets you keep a bigger share of what you earn is better than a legal shakedown by Big Brother.
Now, the biggest obstacle between America and the future she deserves is -- and I think you've already guessed it -- special interests. Everybody agrees that our proposal would be better than the current disgrace we call our tax system, but a lot of cynics in Washington are laying odds against getting our fair share tax plan. Our plan has too many enemies, they say, enemies among those with a vested interest in the status quo. Status quo -- that's Latin for the mess that we call our present tax system. [Laughter] Well, the special interests may think they have this one locked up tight, and we may be starting this battle for tax fairness as underdogs, but you students of North Carolina State know a thing or two about starting out as underdogs and going on to victory. You began the '83 basketball season near the bottom of the polls, but you never lost heart. You gave it all you had through that final second of play when a dunk shot won you the championship. Well, what I want to do is bring a little more of that Wolfpack spirit to Washington this fall and win one for America.
Now, many of you, I'm sure, have already had your first job, which means that you've had your first experience with the incredible shrinking paycheck. [Laughter] You have to see it to believe it. There in one box it tells you your gross pay. And then you have all those other little boxes with the taxes taken out. [Laughter] The Federal tax, the withholding, the State tax, the Social Security tax. The list seems endless. And the end of all of it is the figure for your net income. You may have wondered at that point whether you were working for yourself or the Government. And that's a good question, but what we need is a good answer.
The way our tax system is structured, the harder you work and the more you earn, the less you get to keep. One of the first priorities of our tax overhaul is to make sure that more of your hard-earned dollars end up where they belong -- in your wallets and not in Uncle Sam's pockets. Now, letting you keep more of what you work for, that's one thing that fairness means. And that's one reason that America needs tax fairness before this semester's seniors graduate. We need America's tax plan this year, in 1985.
Fairness also means opportunity, and opportunity means a vital and growing economy. And that's another priority of our fair share tax plan: to keep our economy humming, creating jobs and opportunity, not only for you seniors but for the juniors, sophomores, and freshmen, too. Our first 25-percent across-the-board tax rate cut has helped give us 32 straight months of growth and helped create nearly 8 million new jobs. Well, on the theory that you can't have too much of a good thing, we're going to cut tax rates again. Our goal is a decade of economic expansion and 10 million more jobs in the next 4 years. And that's 10 million very good reasons why our nation simply can't afford a tax increase that would hurt economic growth. No matter what they call it, no matter how they disguise it, no tax increase will cross my desk without my writing a great big veto on it.
The present system, with all its shelters and loopholes, is not only unfair; it is dumb economics. The economic misuse of the real estate provision of our tax code alone is mind-boggling. Many of our nation's business districts are beginning to look more like ghost towns, with huge see-through skyscrapers. They're built, but not finished -- no partitions. That's why they're called see-throughs. They were constructed largely for tax reasons and never occupied. The return to the owners was in tax writeoffs, not in profit on an investment. The waste is in the multibillions, and we, the American people, must pay for it with higher taxes and lower economic growth. I say it is time we pulled our money out of tax shelters and invested it in America's future.
By closing loopholes and making sure that everybody pays their fair share, we can lower the tax rates for everybody. With lower personal and corporate rates and another cut in the capital gains tax, small and entrepreneurial businesses will take off. Americans will have an open field to test their dreams and challenge their imaginations, and the next decade will become known as the age of opportunity.
Fairness also means giving some much-needed relief to the long-suffering American family by raising the standard deduction to $4,000 and nearly doubling the personal exemption to $2,000. This means that a family of four with two wage earners will pay no tax on the first $12,000 of earnings. This summer I received a report card. The House Select Committee on Children, Youth, and Families graded all the different tax plans according to their effect on children and families. Our fair share tax plan came out at the top of the class. That's better than I did when I was in college. And what's especially important, that report card came from the Democratically controlled House of Representatives, not from my own party. I believe that this can be one of those great moments when we stop being Democrats and Republicans and for a time are just Americans.
Audience. U.S.A.! U.S.A.! U.S.A.!
The President. Thank you.
Fairness also means a fair deal for the poor. Our tax plan would immediately take the working poor or any of the blind or elderly Americans living at or below the poverty line off the Federal tax rolls with not one penny of tax to pay. The fact is, years of runaway government spending in the sixties and seventies produced an inflationary binge that threw millions of people into poverty. And that runaway government spending was for a program the Government called the War on Poverty. Well, poverty won. [Laughter] And then our first tax cut took effect and ignited one of the strongest economic expansions in history. Between 1983 and 1984, poverty dropped faster and farther than it had in over 10 years. Those figures proved conclusively that big government, big spending, and inflationary policies create poverty, and that tax cuts, less government, and a thriving private sector promote self-sufficiency and prosperity.
You know, I have to inject something here. One of my favorite stories about runaway bureaucracy was a fellow -- this is for true -- the fellow who sat there in one of our large departments, and his job was, when the papers came there, he was to look at them, whatever was sent to him, and decide where it went in the agency, initial it, and send it on. And one day a classified paper marked ``secret'' came there. Well, it arrived there and was handed to him. So, he figured out where it should go and wrote his initials on it and sent it on. Twenty-four hours later it came back to him with a memo attached that said, ``You weren't supposed to see this. Erase your initials -- [laughter] -- and initial the erasure.'' [Laughter]
You know, the Constitution limits a President to two terms, so there are no more elections for me.
Audience. Awww!
The President. Well now, wait a minute. No, no. They're -- nope -- there isn't any need for me to take political considerations into account. All I have to think about when I make a decision now is what's good for America. Because I, like so many of you and in about the same number of years, we'll be out there in the world. I'll be living out there with you and with what we've been able to accomplish in these next few years in Washington. And that's why I'm going all out for this simple tax reform, and will you help me?
Audience. Yes!
The President. We can do it, but we're going to need your very strong and vocal support. The walls of Congress are pretty thick. You're going to have to speak up if you want them to hear you. Do we want a tax system that's fairer and simpler with lower tax rates for most Americans?
Audience. Yes!
The President. I can hear you, but make sure those gentlemen and ladies of the press back there can hear you, too. Do we want a decade of prosperity and 10 million new jobs before 1990?
Audience. Yes!
The President. Do we want record growth, record business starts, and an entrepreneurial renaissance of invention and productivity that'll keep America number one in world competition?
Audience. Yes!
The President. Do we want America's tax plan, a fair share tax plan for everyone?
Audience. Yes!
The President. Something tells me I came to the right place. [Applause]
All right. Now, the present income tax has 14 brackets. And in these recent years of high inflation, a worker would get a cost-of-living increase to keep pace with inflation. Did he or she keep pace? All too often the increased number of dollars pushed the worker into a higher bracket, leaving him or her with less purchasing power than before the pay raise. Of course, the Government got a raise, a tax increase without having to pass one. Well, we fixed that in our 1981 tax bill. Now the brackets are indexed according to the inflation rate. You don't go into a higher bracket unless you've gotten a real increase in purchasing power.
But our tax reform will reduce those 14 brackets to 3 brackets -- 15 percent, 25 percent, and 35 percent. An earner will keep 85 cents out of each taxable dollar up to $29,000. From there up to $70,000, you keep 75 cents out of each taxable dollar earned, and above $70,000, you keep 65 cents out of every additional dollar that you earn. Now, in my adult lifetime, I have seen and worked during top tax brackets of 94 percent. That, to be true, was in wartime. But when peace came, it was only reduced to 91. Go ahead, work harder, earn more dollars, and the Government would let you keep less than a dime out of each dollar. When our administration began in Washington, there was a 70 percent bracket; now it's 50 percent. And under our reform plan, that top bracket will be down to 35 percent.
Today we're being called to a second American revolution of hope and opportunity. Our country has never been stronger or our economy so vital. We're at the dawn of a technological revolution which will soon be shining its light into every aspect of our lives. If I have one piece of advice for you: Dare to dream big dreams. Follow your star. Maybe some of you dream of striking out on your own some day as entrepreneurs, starting your own business, or joining a new start-up venture with exciting ideas. Well, there's never been a better time.
There'll always be the naysayers, people who tell you it can't be done. Let me just tell you about one. Just recently I met a young woman with her young husband. She was fairly recently out of college. She had aspired to a career as a classic pianist, and then, shortly after graduation, developed a tendonitis that made the career that she trained for and wanted impossible. She no longer could play. There she was at home; she didn't know what to do. Some of her relatives knew that she'd had a kind of personal recipe for brownies, and while she was there they said, ``Well, while you're waiting to see what you're going to do, why don't you make those brownies and sell them to the nearby grocery stores here and at least have a little spending money.'' So, she did. Last year her business, Nancy's Brownies, sold to gourmet restaurants, to delicatessens, to airlines, and so forth -- did $2\1/2\ million in business.
I met a couple of young fellows the other day who have an electrical business. They did a million dollars business last year as partners. They got together; they figured that a company with their names put together might just have a pretty good chance. Their names are Cain and Abel. [Laughter]
Well, when our administration sees some of these things, this is why we think what our biggest responsibility is wherever it's in your way -- to get government out of your way. Those naysayers that I mentioned a little while ago, those gloom artists, just remind them that this is America and that there are no limits except those that we put on ourselves. We're free to follow our imaginations into a future of abundant promise. Like the final line in that movie ``Back to the Future,'' where we're going, we don't need any roads, just an open heart and a trusting soul to map the way and those standard American qualities of hard work, determination, and faith in the loving God who has so blessed this land beyond any place else.
Thank you. God bless you all. Thank you very much.
Note: The President spoke at 11:30 a.m. at the William Neal Reynolds Coliseum. Following his remarks, the President went to the Special Editions Restaurant at the University Student Center, where he had lunch with members of the chancellor's liaison council. Following the luncheon, the President returned to Washington, DC.