No ‘Free Rides,’ He Tells Students in Explaining Reform Plan : Everyone Should Pay Taxes, Reagan Says

Joking that if the present tax system were a television show it could be called “Gimme a Break,” President Reagan lectured high school students Thursday on the benefit to society when everybody pays some tax.

In trying to explain his ambitious tax revision proposal to 3,000 students fanning themselves in a steamy gymnasium where the temperature topped 100 degrees, Reagan said that “we want to see that everyone pays their fair share and no one gets a free ride.”

The President told the students that “it’s good for society when we all know that no one is manipulating the system to their advantage because they’re rich and powerful.”

‘We’re All Citizens’

“But it’s also good for society when everyone pays something, everyone makes a contribution. After all, we’re all citizens, equal in the eyes of the law and equal in the eyes of God.”

However, when he was California’s governor, Reagan was embarrassed politically when it was disclosed that he had owed no state income tax for the previous year, 1970. Reagan said that it was because of “investment losses.” Reporters discovered that he had taken advantage of preferential tax treatment by investing in out-of-state cattle breeding herds.

It was never disclosed whether Reagan ever had avoided owing federal taxes. But, since becoming President, he annually has released his income tax return. He and his wife paid $147,826 in federal taxes for 1984.

A central feature of Reagan’s tax simplification plan is elimination of many tax breaks for individuals and businesses, thus making lower tax rates possible while keeping revenue for the federal Treasury about the same.

In lecturing the students at length on what he called the current tax system’s “institutionalized unfairness,” Reagan said:

“You’re given a lot of benefits when you’re born in the U.S.A., but you’re given a responsibility, too--a responsibility to do your part and become a contributing member of the American family and an equal partner in America Inc. When you pay your taxes, you buy your shares.”

Although there currently is a minimum income tax, many wealthy Americans manage to legally escape paying it.

The Administration, in releasing the President’s tax plan, reported that 30,000 families with incomes exceeding $200,000 a year pay less than 5% of their earnings in federal taxes. Still, the over-$200,000 income group would receive the biggest tax reduction under Reagan’s plan, an estimated 10.7%.

From Atlanta, Reagan flew to Birmingham, Ala., where, for the first time on his two-day Southern trip, he mentioned Tuesday’s Supreme Court decision banning state-sponsored prayer in public schools. The court struck down an Alabama law that required a moment of silence each day for meditation or prayer.

Uphill Battle on Prayer

At a fund-raising luncheon for Sen. Jeremiah Denton (R-Ala.), Reagan said: “I know there’s been a strong push here in Birmingham to help restore voluntary prayer in public schools. As this week’s Supreme Court decision shows, we still have an uphill battle before us. So, I hope we can count on the support of Alabama’s entire congressional delegation for our prayer (constitutional) amendment, because it is time it was adopted.”

This was a noticeably mild reference to school prayer for Reagan, who throughout his 1984 reelection campaign pushed hard for a constitutional amendment. But White House spokesman Larry Speakes, asked the reason for the muted message, said that the issue “is not something that calls for hard rhetoric.”

It was clear that, with Reagan currently pressing for his tax plan, aid for Nicaraguan rebels and a budget he finds acceptable, his advisers think he has a full plate and do not want him adding school prayer to the current legislative menu.