[Weekly Compilation of Presidential Documents Volume 37, Number 6 (Monday, February 12, 2001)]
[Pages 257-259]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks Announcing the Tax Cut Plan and an Exchange With Reporters

February 5, 2001

    The President. Good morning. I want to thank the families for being 
my guests here at the White House. I'm honored to host the Peterson 
family, the Claytor family, and the Gordon family, to talk about the 
economic challenges they face. Their circumstances are

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different, but I strongly believe they deserve to keep more of their own 
money, and so does every family in America, deserve to keep their own 
money.
    And we're talking to these families here--I think they like the 
idea. Despite the prosperity of the past two decades, many American 
families feel squeezed. They sometimes carry a lot of consumer debt. In 
1998 the average family credit card debt was more than $4,000. At the 
same time, every American family is facing higher energy costs.
    Under the plan I'll be sending to Congress later this week, every 
American who pays income taxes will get tax relief. And the average 
relief for a family of four with two children will be $1,600. This is 
real and practical help, when at this time many Americans need it. 
Sixteen hundred dollars will pay the average mortgage for a month. 
Sixteen hundred dollars will pay for a year's tuition at a community 
college. Sixteen hundred dollars will pay the average gasoline costs for 
two cars for a year. And $1,600 will buy the average California family 
24 months' worth of electric power.
    My plan addresses the struggles of American families and respects 
their judgment. It doesn't tell families how to spend their money. It 
doesn't single out some Americans for relief, while leaving others out. 
It's tax relief for everybody who pays taxes. That's what the times and 
basic fairness demand.
    Here's how it will work. Under the existing law, Americans are 
grouped in five income tax brackets: 15 percent, 28 percent, 31 percent, 
36 percent, and nearly 40 percent. My plan would reduce that to four 
lower brackets: 10 percent, 15 percent, 25 percent, and 33 percent. In 
other words, we'd begin the simplification of the code.
    Each of the families with me today would benefit from these lower 
taxes. Most families will get a $1,000-per-child tax credit. Everybody 
who pays income taxes will get some relief, but the biggest percentage 
cuts will go to the families who need it most.
    The Peterson family, for example, will get a 100 percent cut in 
their income taxes, saving almost $1,100 a year. Paul and Debbie and 
their two beautiful girls would appreciate that. All of the income tax 
rates should be cut. Most families over a lifetime will move through a 
couple of different tax brackets. Many families will move through all 
four as they move up the ladder of economic success and then back down 
as they retire and leave the work force.
    Our tax code should not punish success at any stage of life. The top 
Federal income tax rate at almost 40 percent, and the State income taxes 
on top of that, people can sometimes feel like the junior partner in 
their own lives. That's why we set the top rate at 33 percent. I believe 
it's an important principle that no American should pay more than a 
third of his or her income to the Federal Government in Federal taxes.
    And Government shouldn't block the way into the middle class for 
hard-working people who are trying to get there. The single mother 
earning $25,000 a year manages to earn $1,000 by getting a promotion; 
the Federal Government takes about half of it away from her. That's a 
higher marginal tax rate than a lawyer earning $250,000. That's not 
right, and that's wrong. And my plan addresses this inequity.
    This is my approach: tax relief for everybody, in every bracket, 
averaging $1,600 per family, while still reducing our national debt and 
funding important priorities.
    I'm asking all Americans to examine this plan, and I'm asking for 
your support. The Constitution charges the Congress with the 
responsibility to write our tax laws. And I respect that responsibility. 
But it is my obligation to lead, and that's what I'm going to do. My 
plan is good for the long-term health of our economy. It is good for the 
businesses that create jobs. It is good for America and for the American 
families that make our country so unique and strong.
    Thank you for coming.

Retroactive Tax Cut

    Q. Mr. President, do you think the tax cut should be retroactive to 
the first of the year?
    The President. A lot of Members of Congress have talked to me about 
that. And I do. And we look forward to working with Congress to expedite 
money into the pockets of the American people. I strongly believe that a 
tax relief plan is an important part of helping our country's economy 
recover. And

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I think expediting money into peoples' pockets is going to be a key 
ingredient. I look forward to working with Congress, Members of both 
parties, to accommodate the budgetary needs and, at the same time, help 
get money into peoples' pockets quicker.

Tax Plan Structure

    Q. Mr. President, Democrats in Congress think that this plan, as 
it's structured now, is weighted too heavily to the higher income 
brackets. Are you willing to work with them to perhaps change the ratios 
a little bit, if that's what it takes to get their support?
    The President. I believe the plan, strongly believe the plan that I 
have submitted is structured the right way. I've heard all the talk 
about class warfare and this only benefiting the rich. I think when 
people take a good, hard look at the rate reduction and who benefits and 
the fact that our plan erases inequities in the tax code or eases 
inequities in the tax code and that the biggest--the bottom end of the 
economic ladder receives the biggest percentage cuts, people will come 
to realize it. I think it's important to cut all tax rates. Yes.

Enhancing Taxpayers' Cash Flow

    Q. Mr. President, in addition to making the tax cut retroactive, 
your economic adviser said yesterday you would also support bringing 
more of the benefits forward to the first year of the plan. Is that 
correct?
    The President. What I'm referring to is enhancing the cash flow of 
the taxpayer as quickly as possible, and that's what we're going to work 
on. I also saw some comments which I thought made a lot of sense, that 
some in Congress view this as an opportunity to load up the tax relief 
plan with their own vision of tax relief. I want the Members of Congress 
and the American people to hear loud and clear: This is the right size 
plan; it is the right approach; and I'm going to defend it mightily.

Top Tax Bracket

    Q. There is no family, sir, representing the last tax bracket, the 
bracket that would get the highest dollar return. Why is that?
    The President. Well, I beg your pardon, I'm representing--
[laughter]--I got a little pay raise coming to Washington from Austin. 
I'll be in the top bracket. [Laughter]

Former President Clinton

    Q. Mr. President, on another note, sir? It appears the Clintons may 
have taken some gifts that were actually given to the White House. Do 
you feel that they should return any of these gifts?
    The President. It's important for all the facts to be laid out on 
the table, and I'm confident that the President--the former President 
and First Lady will make the right decision.
    Thank you all.

Note: The President spoke at 10:18 a.m. in the Diplomatic Room at the 
White House.