February is a month when we honor our greatest Presidents, George Washington and Abe Lincoln. February can now add the greatest President of the 20th century, Ronald Reagan. Yesterday was the 100th anniversary of his birth in Illinois.
In the last few months, high taxes have been a very controversial issue. The liberals want to significantly raise tax rates on people who make more than $200,000 a year. So let me share with you a true story about Reagan and taxes. When he became President, we were in an economic recession very similar to what we have today. Tax rates on the rich were very high. The issue became whether President Reagan should call for keeping tax rates high in the hope that tax revenue would help to balance the budget, or cut tax rates substantially in order to promote investment and jobs. His own staff was divided on this fundamental issue. They argued back and forth, and President Reagan had to personally make the decision. I wasn't present at that important White House meeting, but I am reliably told what happened. After both sides had argued their case, here is what President Reagan said:
When I was in Hollywood making several movies a year, my accountant came to me and told me there was no point in my working past February because all the money I earned for the rest of the year would be taken by income taxes. So I just quit work altogether. I hung around the Brown Derby (that was a famous restaurant), I drank too much, and my first wife divorced me. My conclusion is that I'm not going to support a tax policy that discourages people from working. The result was that Reagan substantially cut tax rates, so that upper-income people were motivated to invest their money in new businesses, we had a rapid economic recovery, and the best economic expansion of our lifetime.
Listen to the radio commentary here: