Today is the anniversary of former president Ronald Reagan signing into law the Tax Reform Act of 1986. The act was the second major law he signed to reform the tax code for the American people.
Republicans and Democrats came together to cut taxes for hardworking families in 1981, and again in 1986 to simplify the tax code, so that everyone could get a fair shake. The rest, as they say, is history.
The economy boomed, launching into one of the largest peacetime economic expansions in history. Dormant small businesses and factories sprung back to life. The famed American Worker produced at unprecedented levels. The median family income rose. And more American products than ever before reached foreign shores, stamped with those four beautiful words: “Made in the USA.”
The 1980s also saw extraordinary ideas transformed into reality by American inventors and entrepreneurs. Many of those creations dramatically improved our quality of life. Others connected us like never before and put an entire universe of information at our fingertips. Still others, like the space shuttle after its first launch in 1981, stretched the bounds of what we thought was possible for humankind.
It was a time of extraordinary optimism — it was truly “Morning in America,” an economic miracle for the middle-class.
A lot has changed since then, especially when it comes to taxes.
While our economic competitors slashed their taxes in hopes of replicating America’s success, our leaders remained complacent or, in some cases, reversed course.
We are now among the highest taxed nations in the developed world. Our tax code and laws have nearly tripled in length since the 1986 reforms. They now span 2,650 pages, with another 70,000 pages of forms, instructions, court decisions, and other guidance.
We have watched our leaders allow other countries to erode our competitive edge, take our jobs, and drain our wealth. And, for the first time in our history, Americans have feared that their children will not grow up to be better off financially than they are.
That era of economic surrender is now over.
In the nine months since I took office as president, we have removed intrusive, job-killing regulations at a record pace. We are leaving lopsided international deals that hurt America like the Trans-Pacific Partnership and Paris Climate Accord. We have unleashed American energy by ending the war on coal and approving major projects like the Keystone XL and Dakota Access Pipelines. And earlier this month, I signed an executive order to take important steps to free our people from the grip of Obamacare.
And now, unemployment is at a 16-year low. Wages are rising. Manufacturing confidence is higher than it has ever been. The stock market is soaring to record levels. And GDP growth climbed to more than 3% in the second quarter.
The optimism has returned — the sun is once again rising over America.
But our economy cannot take off like it should unless we transform our outdated, complex and burdensome tax code, and that is exactly what we are proposing to do.
Revising our tax code is not just a policy discussion — it is a moral one, because we are not talking about the government’s money – we are talking about your money, your hard work.
According to the Tax Foundation, taxes cost Americans more out-of-pocket than housing, clothing, and food — combined.
Somehow, this has become “normal” in the Land of the Free, but it should not be.
American families should not have to send more money to the government than they spend on building a better life for themselves and their children. You are the ones who carry this nation on your back, and it is time for you to get the relief that you deserve.
That is why we are taking action to dramatically reduce the burden that the sprawling federal tax code has become on our citizens.
Our plan will transform the tax code so that it is once again simple, fair and easy to understand. We want you to spend your valuable time pursuing your dreams, not trapped in a tax compliance nightmare.
We will cut taxes for hardworking, middle-class families.
We will double the standard deduction, which means the first $24,000 of a family’s income will be tax-free. We will also expand the child tax credit. And we will lower rates so that families will keep more of their hard-earned money.
We will also restore our competitive edge so we can create better jobs and higher wages for American workers.
Our plan will provide tax relief to businesses of all sizes, and deliver our small and medium-sized businesses the lowest top rate in more than 80 years.
Finally, we will bring back trillions of dollars in American wealth currently parked overseas.
Today’s tax system foolishly penalizes companies that bring foreign profits back to the United States. Our plan encourages companies to bring this money home, where it can be invested in American companies, American jobs and American workers.
If Congress comes together to enact this commonsense plan, the Council of Economic Advisers estimates that it will raise the annual income of a typical, hardworking American household by an average of around $4,000.
Just imagine the possibilities.
We have the benefit of hindsight as we look back at the three decades since our country’s last major tax reform. We can see what worked and what did not. And most importantly, we can apply the lessons learned to the challenges of today.
The tax cuts and reforms of the 1980s show that when we empower the American people to pursue their dreams, they will not only achieve greatness and create prosperity beyond imagination, they will build an entirely new world.
It is time to ignite America’s middle class miracle once again.
