Let us begin by challenging our conventional wisdom.  There are no constraints on the human mind, no walls around the human spirit, no barriers to our progress except those we ourselves erect.  Already, pushing down tax rates has freed our economy to vault forward to record growth.

In Europe, they’re calling it “the American Miracle.”  Day by day, we’re shattering accepted notions of what is possible.  When I was growing up, we failed to see how a new thing called radio would transform our marketplace.  Well, today, many have not yet seen how advances in technology are transforming our lives.

In the late 1950’s workers at the at&T semiconductor plant in Pennsylvania produced five transistors a day for $7.50 apiece.  They now produce over a million for less than a penny apiece.

New laser techniques could revolutionize heart bypass surgery, cut diagnosis time for viruses linked to cancer from weeks to minutes, reduce hospital costs dramatically, and hold out new promise for saving human lives.

Our automobile industry has overhauled assembly lines, increased worker productivity, and is competitive once again.

We stand on the threshold of a great ability to produce more, do more, be more.  Our economy is not getting older and weaker; it’s getting younger and stronger.  It doesn’t need rest and supervision; it needs new challenge, greater freedom.  And that word “freedom” is the key to the second American revolution that we need to bring about.

Let us move together with an historic reform of tax simplification for fairness and growth.  Last year I asked Treasury Secretary-then-Regan to develop a plan to simplify the tax code, so all taxpayers would be treated more fairly and personal tax rates could come further down.

We have cut tax rates by almost 25 percent, yet the tax system remains unfair and limits our potential for growth.  Exclusions and exemptions cause similar incomes to be taxed at different levels.  Low-income families face steep tax barriers that make hard lives even harder.  The Treasury Department has produced an excellent reform plan, whose principles will guide the final proposal that we will ask you to enact.

One thing that tax reform will not be is a tax increase in disguise.  We will not jeopardize the mortgage interest deduction that families need.  We will reduce personal tax rates as low as possible by removing many tax preferences.  We will propose a top rate of no more than 35 percent, and possibly lower.  And we will propose reducing corporate rates, while maintaining incentives for capital formation.

To encourage opportunity and jobs rather than dependency and welfare, we will propose that individuals living at or near the poverty line be totally exempt from Federal income tax.  To restore fairness to families, we will propose increasing significantly the personal exemption.