In 1981 our critics charged that letting you keep more of your earnings would trigger an inflationary explosion, send interest rates soaring, and destroy our economy. Well, we cut your tax rates anyway by nearly 25 percent. And what that helped trigger was falling inflation, falling interest rates, and the strongest economic expansion in 30 years.
Over the course of this century, our tax system has been modified dozens of times and in hundreds of ways, yet most of those changes didn’t improve the system. They made it more like Washington itself—complicated, unfair, cluttered with gobbledygook and loopholes designed for those with the power and influence to hire high-priced legal and tax advisers.
But there’s more to it than that. Some years ago an historian, I believe, said that every time in the past when a government began taxing above a certain level of the people’s earnings, trust in government began to erode. He said it would begin with efforts to avoid paying the full tax. This would become outright cheating and, eventually, a distrust and contempt of government itself until there would be a breakdown in law and order.
Well, how many times have we heard people brag about clever schemes to avoid paying taxes or watched luxuries casually written off to be paid for by somebody else—that somebody being you. I believe that, in both spirit and substance, our tax system has come to be un-American.
How would the proposal work? The present tax system has 14 different brackets of tax rates ranging from 11 to 50 percent. We would take a giant step toward an ideal system by replacing all that with a simple three-bracket system—with tax rates of 15, 25, and 35 percent.
By lowering everyone’s tax rates all the way up the income scale, each of us will have a greater incentive to climb higher, to excel, to help America grow.
The power of these incentives would send one simple, straightforward message to an entire nation: America, go for it!
To young Americans wondering tonight, where will I go, what will I do with my future, I have a suggestion: Why not set out with your friends on the path of adventure and try to start up your own business? Follow in the footsteps of those two college students who launched one of America’s great computer firms from the garage behind their house. You, too, can help us unlock the doors to a golden future. You, too, can become leaders in this great new era of progress—the age of the entrepreneur.