Ronald Reagan picture

Remarks to Religious Leaders at a White House Meeting on Tax Reform

October 29, 1985

Thank you all very much, and welcome to the White House. I always feel self-conscious when I say that, and I say that every time I'm in here, but somehow, technically—and that just kind of explains some of the problems of government—that this Old Executive Office Building is part of the White House. I haven't put my clothes in a single closet over here.

Well, I'm glad to welcome members of the clergy and lay leaders to Washington. I've always' assumed that men of the cloth can visit this town and really see how it works without returning home feeling the need to pray fervently, and let me tell you, we need all the help we can get. I also feel a certain kinship with those of you who are members of the clergy. Now, this is a comparison that isn't always made, but politicians and clergy do have a lot in common. We both have to make speeches and keep our audiences interested, and I know I'm running a risk in telling members of the clergy a story about their own profession, but maybe it will be new to some of you.

It has to do with a young minister who was very disturbed because sometime, particularly on those hot Sunday or summer mornings—Sunday mornings, he'd see his group nodding off while he was preaching his sermon. And he told about his distress to a more experienced and older clergyman who said that he'd had that same problem, but he'd found an answer to it. He said, "When you see them and their eyes beginning to close," he said, "you just insert a line in your sermon and say, 'Last night, I held another man's wife in my arms.'" [Laughter] And he said, "They'll wake up." [Laughter] Well, it happened. There came a hot Sunday morning, and there they were and the eyes were closing, and remembering, he said the line: "Last night, I held in my arms a woman who was not my wife." Well, the first minister had told him that after he got them awake, he was to then say, "That woman was my dear mother." And this young fellow said the line and then said, "I can't remember who she was." [Laughter] Well, I hope I have better luck today. [Laughter]

I've come to talk to you about our efforts to overhaul our nation's tax code, but I first want to stress our commitment to solving the school dropout problem and youth unemployment. The two subjects aren't unrelated because a vital, growing economy, liberated from high tax rates and an unfair and restrictive tax code, is the best way to provide opportunity for all. For the special problem of our unemployed young people, a youth employment opportunity wage is also vital. Now, if you haven't heard that term expressed, it's something we've asked of the Congress and asked that they do. The figures reveal that every time the minimum wage has increased, the number of jobs available for teenagers, young people, has gone down—those afterschool jobs, those weekend, and those summer jobs. The jobs are simply priced out of existence. They aren't that necessary, and we've made the cost too high. The school dropout problem is more complex, but I think that we can all agree that it's at least attributable in part to the increase in family breakdown. But one of the common causes of dropout from school also is a need or desire to be earning some money.

In this modern age, families are subject to intense pressures from all sides. And sad to say, the Federal Government, instead of helping, has been adding to the burden of families. Throughout the great tax explosion of the sixties and seventies, everybody with a paycheck got hit and hit hard by taxes, but those trying to raise families really got clobbered. Not only did their taxes skyrocket, their personal exemption, the real value of the deduction that they were allowed to take for themselves and each one of their dependents, was steadily knocked down by inflation. If the personal exemption, which was $600 in 1948, had kept pace with inflation, that exemption today would be $2,700. Now, this is where the profamily initiatives of America's fair share tax plan come in. We're not going to go to the $2,700—or haven't asked to do that—but in our tax plan we have asked to almost double it, to raise it to $2,000 in order to make up for some of what the family has lost over those years. We're also increasing the standard deduction to $4,000 for joint returns. Our proposal will mean that families, as well as the elderly, the blind, and the disabled, living at or below the poverty line will be completely scratched from the Federal income tax rolls. The U.S. Government will no longer tax families into poverty. And under our proposal, a family of four wouldn't have to pay one single cent of Federal income taxes on the first $12,000 of income. And because saving is so essential to families, but so very difficult with all those expenses, we're expanding the taxfree savings accounts of IRA's, the individual retirement accounts, so that they're fully available to nonwage-earning spouses. We think they're working, too.

America's fair share tax plan has received commendations from some unexpected quarters. The Democratically controlled House Select Committee on Children, Youth, and Families rated our plan more profamily than any other tax proposal around and light years ahead of the present system. And then, there's Pat Moynihan, the Democratic Senator from New York. He said that our profamily provisions will "do more for the poor than Lyndon Johnson ever did during the years of the Great Society." So, I guess the question is: Are we going to give up and stick with a tax system loved only by the special interests and their high-priced tax attorneys, or are we going to stop making excuses and give the poor the break from unfair taxation they so very urgently need? Indeed, giving everyone a break from this unfair tax situation.

You know, the Lord has told us that his share is a tenth of what we earn, and He has told us that if we prosper 10 times as much, we will give 10 times as much. But when we start computing Caesar's share under our present tax policy, you can prosper 10 times as much and find you're paying 50 times as much tax. So, I think what's fair for the Lord ought to be more reasonably fair for Caesar, also. [Laughter]

Opportunity also means economic growth, and the best way to achieve that's by cutting tax rates still further. One of the great economic lessons of the last few years is the beneficial effect of tax rate reductions. We've seen that as tax rates go down, all the negative economic indicators, like poverty and inflation, go down, too; and all the positive economic indicators, like productivity, disposable income, and employment, go up. Something else also goes up when marginal tax rates are cut—believe it or not—at the lower rates, government revenue increases; it does not go down with the cut in the rates.

Tax rates in this country, long ago, passed the point where they became counterproductive, stunting economic growth and actually bringing in less revenue than tax rate cuts that spur growth and draw investment out of wasteful loopholes and back into the productive economy. Just a few years ago, before our present tax cut—the one that we launched in 1981—before that, there was only $39 million in America available for what is called venture capital—to be invested into new ventures and new business and so forth. Well, last year, after our tax cuts were in effect, there was $4 billion available for such investment.

Our first tax cut—you can see the across-the-board thing—it was 25 percent. And since 1984—that was the first year that all of the three installments of our tax cut were in place—we found that the tax revenues have been increasing at a rapid pace. And in fiscal year 1985, which ended October 1st, Federal revenues continued to grow at the remarkable rate of 10 percent. Now, let me suggest that over the long haul, the Federal Government simply can't raise revenue any faster than by cutting tax rates and, then, cutting them again. So, it doesn't make much sense to blame the deficit on tax cuts, and even less to ask for economy-busting tax hikes as a cure. The deficit is quite clearly caused by overspending. The government Gargantua has been eating up those extra revenues from our tax cut and pounding on the table demanding more. Well, we're going to put Gargantua on a diet, the Gramm-Rudman-Hollings diet. It would pare $36 billion a year off its overeating, resulting in a balanced budget by 1990. All we're asking is that Congress take a little over one-half the extra $60-odd billion in revenue generated by our tax cuts and economic growth and use it to reduce the deficit.

And the way some people in government spend the public's money also reminds me of a story. And again, it's about a clergyman who had gone to a small hamlet about a hundred miles from his own parish to preach at a revival meeting. And driving into the village, he noticed a man from his own community. The fellow was known, a little bit, for his drinking. And he was sitting on the front steps of the general store, and he had a bottle of beer in his hands. And the preacher stopped his car, and he asked the drinker why he was so far from home. And the man told him that beer was 5 cents a bottle cheaper where they were then. Well, the minister pointed out the cost of travel back and forth, the price for a hotel room. And the beer drinker retorted, "I'm not stupid, Reverend, I just sit here and drink till I show a profit." [Laughter]

Well, we're seeing an economic renaissance in this country, but we need two things to keep it going: cuts in the deficit and cuts in the tax rates. Both are in the Congress now, and we need your support to keep their noses to the grindstone. As for America's fair share tax plan, we're shooting for Christmastime. Economic growth and tax fairness are gifts we owe ourselves and our children, and with your help, we'll have them all wrapped up by the holiday season, ready to take effect in 1986. And then we'll really have something to celebrate on New Year's Day.

I thank you all, thank you for being here. God bless you all.

Note: The President .spoke at 1:02 p.m. in Room 450 of the Old Executive Office Building.

Ronald Reagan, Remarks to Religious Leaders at a White House Meeting on Tax Reform Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/259466

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