Regan Credits Anecdote for Tax Overhaul

WASHINGTON — Ronald Reagan, always a soft touch for a personal anecdote, was convinced of the need to radically overhaul the nation’s tax law when told that his secretary paid more in taxes than 60 of the largest U.S. corporations, Donald T. Regan writes in his new book.

The President’s former Treasury secretary and ex-chief of staff takes much of the credit for passage of the 1986 Tax Reform Act, considered by some the major domestic achievement of Reagan’s second term.

In “For the Record,” which went on sale Monday, Regan writes that the idea of simplifying the tax code by closing loopholes and lowering tax rates was moribund when he took the cause to Reagan at a White House meeting in late 1983.

“President Reagan liked to start every meeting off with a story or a joke. So, as a way of introducing the subject, I asked him a question about his old employer, General Electric,” Regan said. “What does General Electric have in common with Boeing, General Dynamics and 57 other big corporations?”

Reagan, remembering fondly his days as a good-will ambassador for GE, smiled and leaned forward for the punch line, only to be told, “What these outfits have in common is that not one of them pays a penny in taxes to the United States government. . . . Your secretary paid more in federal taxes last year than all of those giant companies put together.”

Shocked, Flushed, Angry

Regan describes the President as shocked and flushed with anger by this news, saying he did not realize things had gotten that far out of line.

In contrast to the harsh depiction of Nancy Reagan in the rest of the book for her use of astrology and her behind-the-throne power, Regan said the First Lady came to his aid in 1982 at a time when the Treasury secretary had been shunted aside in the economic decision-making process.

Mrs. Reagan called him to find out how he had answered a letter from her stepbrother, Dr. Richard Davis, concerning the health of the savings and loan industry. The discussion then moved to Regan’s general views on the economy.

Regan quotes Mrs. Reagan as saying Defense Secretary Caspar W. Weinberger was greedy for funds for the military and had no idea he was hurting the economy.

Mrs. Reagan said she felt the President needed to hear Regan’s views.

“I’ll have Mike Deaver put you on the schedule to see him,” she is quoted as saying.