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.

And tonight, I am instructing Treasury Secretary James Baker—­I have to get used to saying that—­to begin working with congressional authors and committees for bipartisan legislation conforming to these principles.  We will call upon the American people for support and upon every man and woman in this Chamber.  Together, we can pass, this year, a tax bill for fairness, simplicity, and growth, making this economy the engine of our dreams and America the investment capital of the world.  So let us begin.

Tax simplification will be a giant step toward unleashing the tremendous pent-up power of our economy.  But a second American revolution must carry the promise of opportunity for all.  It is time to liberate the spirit of enterprise in the most distressed areas of our country.

This government will meet its responsibility to help those in need.  But policies that increase dependency, break up families, and destroy self-respect are not progressive; they’re reactionary.  Despite our strides in civil rights, blacks, Hispanics, and all minorities will not have full and equal power until they have full economic power.

We have repeatedly sought passage of enterprise zones to help those in the abandoned corners of our land find jobs, learn skills, and build better lives.  This legislation is supported by a majority of you.