Ronald Reagan picture

Radio Address to the Nation on Tax Reform

April 13, 1985

My fellow Americans:

I want to talk today about one of the most historic reforms our administration will propose as a top priority for passage in Congress this year. Next month, we'll unveil our plan to completely overhaul our tax code, changing it from a source of confusion and contempt to a model of fairness, simplicity, and incentives for work, risk-taking, and growth.

For millions of us, this weekend marks the final countdown to April 15th, the dreaded day we must bare our financial souls, account for every nickel earned, and deliver to the IRS all taxes due. It is a legal obligation we must meet. But paying taxes is painful, nonetheless.

Not only because tax rates remain too high, which they are despite the reductions we've made, but because over the years the entire tax system has come to mirror Washington itself—a complicated, frustrating, unfair mystery of legalistic gobbledygook and loopholes never designed, it seems, to help everyday wage earners, only those who can afford high-priced attorneys and accountants.

How many times have we heard about profitable companies paying little or no taxes, or seen advertising for sophisticated tax shelter schemes that enable individuals to avoid paying their fair share of taxes, or seen luxuries being written off that must eventually be paid for by somebody else-that somebody, of course, being you. I wonder how many Americans realize that tax deductions are available for seminars and conferences held on cruise ships. We know that our tax code is unfair. We know that it's complicated beyond belief. Millions of Americans need professional assistance just to complete their returns. And we know that it has bred another problem every bit as serious—the wasting of economic resources.

With all the special provisions in our tax laws, too many economic decisions are being made for tax reasons alone, rather than in response to the marketplace. And that causes precious investment to be diverted from areas that could make the United States more productive and competitive in world markets.

Let me cite one example. Have you ever heard of a see-through building? Well, it's one that has no interior walls because it has no tenants. Between 1983 and 1984, only about half of the increase in available commercial office space was reflected in rentals. The other half resulted in vacancies. You see, the tax benefits for investment in some kinds of real estate deals are so generous that being able to rent space may be secondary. The result is overbuilding and high vacancy rates in many American cities. It's time for change—sweeping change. And when we return from the economic summit in May, we intend to move.

Treasury Secretary Jim Baker has been meeting with congressional leaders and authors of other tax reform plans, and we expect to advance a proposal that can win bipartisan approval this year.

Historically, tax reform has become a code word for tax increases, but our reform will not be a tax increase in disguise. And it probably won't please Washington's army of high-powered lobbyists. What our plan will do is give to the average family and every American with courage to invest in a new idea opportunities to make this economy the greatest miracle for growth and human progress the world has ever seen.

With your support, this will be the last year the American people face today's high tax barriers. We'll propose reducing sharply personal tax rates, bringing the top rate down to 35 percent or lower, and providing most Americans a tax cut.

Our plan will mark an historic commitment to American families, for we intend to increase significantly the personal exemption, which will be especially beneficial to low-income families, helping them leave welfare behind, find productive jobs, and join those now paying taxes and contributing to a bigger gross national product. We'll lower personal rates by broadening the base, in other words, eliminate the shelters that make tax avoidance legal. But longstanding provisions like deductions for your home mortgage will be maintained. As we lower rates on the people, we'll reduce corporate rates, too. In meeting concerns for fairness and neutrality, we must not jeopardize economic growth.

My goal is to keep America the premier job-creating nation on Earth, and we intend to unleash the full power of entrepreneurship. Together, we can seize this historic moment. We can create a new tax code-clean, simple, and fair. We can make ours the land of the future, offering unlimited opportunity to all Americans who dare to live for their dreams.

Until next week, thanks for listening, and God bless you.

Note: The President spoke at 9:06 a.m. from Rancho del Cielo, his ranch near Santa Barbara, CA.

Ronald Reagan, Radio Address to the Nation on Tax Reform Online by Gerhard Peters and John T. Woolley, The American Presidency Project

Simple Search of Our Archives