Ronald Reagan’s warning on progressive taxes
Ronald Reagan, who was then a movie actor, delivered one of the greatest and most prophetic speeches of the 20th century, when he appeared before the Orange County Press Club on July 28, 1961.
Vital Speeches of the Day later published the full text under the headline, “Encroaching Control: Keep Government Poor and Remain Free.”
Reagan made an alarming argument: Americans were slowly surrendering to socialism just as some socialists had predicted they would.
“Not too long ago,” Reagan said, “Norman Thomas, six times a candidate for president on the Socialist Party ticket, commented that ‘the American people would never knowingly vote for socialism but that under the name of liberalism, they would adopt every fragment of the socialist program.’”
Reagan pointed to several examples, starting with health care.
“Traditionally, one of the easiest first steps in imposing socialism on a people has been government-paid medicine,” said Reagan. “It is the easiest to present as a humanitarian project. No one wants to oppose care for the sick.”
Four years before Medicare was enacted and 50 years before Obamacare, Reagan explained how the left was already pushing for compulsory health insurance as an intermediate step toward complete government control of medicine.
“It is now proposed that all people of Social Security age be given government paid medical and hospital care,” said Reagan. “Once again, emergency is invoked, and we are given a picture of millions of senior citizens desperately needing medical care and unable to finance it. In all the emotional presentation, the backers of this program seem strangely reluctant to face the facts.”
These facts, said Reagan, were that in 1961 more than two-thirds of American seniors already had private health insurance, and the percentage of Americans insured was growing. “As near as can be determined,” he said, “less than 10 percent of our senior citizens require aid in meeting their medical needs.”
But the socialists’ aim was to control more than just the health care of the elderly. Back then, they were already advancing a bill in Congress “to force all people into a compulsory government health insurance program, regardless of need.
“Why?” asked Reagan. “Well, ex-Congressman (Aime) Forand provides the answer. He says, ‘If we can only break through and get our foot in the door, then we can expand the program after that.’”
And, of course, they did. Medicare and Medicaid led to Obamacare. Obamacare, if left in place, will lead to a single-payer system.
Reagan applied the same correct reasoning to Social Security.
“The average citizen has been led to believe he and his employer are contributing to a fund and that some day he will call upon this, his own money, to carry him over his non-earning years,” said Reagan. “But this isn’t what Social Security representatives said before the United States Supreme Court. They stated that Social Security was not an insurance program and was not based on any actuarial standards. They stated that Social Security dues are a tax for the general use of the government, and the payment of that tax does not automatically entitle anyone to benefits. Benefit payments are a welfare program, which can be curtailed or cancelled anytime Congress should so decide.”
This movie actor then predicted that younger Americans would eventually be taxed to cover Social Security’s deficits and thus be deprived of earnings they could have put to better use themselves.
“And what of our sons — the young man joining the workforce in the next few years?” said Reagan. “He will be taxed to try and catch up on the mounting deficit. If he could have his Social Security tax to invest in private insurance, it would provide for almost double the benefits provided by Social Security.
“This is not the only price we are paying in individual freedom,” said Reagan. He went on to describe how federal subsidies and regulations would increase the power of Washington, D.C., over local public schools. “Federal aid is the foot in the door to federal control,” he warned.
But the socialists’ ultimate tool was the progressive tax. “A basic point to remember,” Reagan said, “is that none of these extensions of socialism can be effected without money.”
“Once we were told the income tax would never be greater than 2 percent, and that only from the rich,” said Reagan. “In our lifetime, this law has grown from 31 to more than 440,000 words. We have received this progressive tax direct from Karl Marx, who designed it as the prime essential of a socialist state.”
“There can be no moral justification of the progressive tax,” he said.
Toward the end of his speech, Reagan told a story about testifying on tax reform in the House Ways and Means Committee. He discovered the committee was not interested in his ideas or those of many others who testified.
Later, Reagan said: “A handpicked group of predominantly campus economists appeared and talked of plugging loopholes to increase the government’s tax revenue. Most of these so-called loopholes are the legitimate deductions without which the whole tax structure would have long since proved unworkable. The suggestions included disallowance of property taxes and interest on loans for income tax purposes and even the elimination of 100 percent deductions of charitable contributions.”
“We have a tax machine that, in direct contravention of the Constitution, is not designed to solely raise revenue but is used, openly and admittedly, to control and direct the economy and to equalize the earnings of our people,” said Reagan.
“Governments don’t tax to get the money they need,” he said. “Governments will always find a need for the money they get.”
“Here is the main battleground!” declared the man who would become the greatest president of the 20th century. “We must reduce the government’s supply of money and deny it the right to borrow.”