The Rich Paid More Taxes Due to the Reagan and Bush 43 Tax Cuts
April 18, 2011BEGIN TRANSCRIPT
RUSH: The views expressed by the host on this program, some of them have been stated for 22 straight years, and some of those same views will have to be repeated for 22 more years. Some of these things we just have to keep saying such as this stuff we're talking about on taxes today. Our website has had these numbers up for years, and we've been on the air for 22 years here. What is it? It was started in '88. This is 2011. Yeah, we're in our 23rd year here. So what's that mean, the 23rd anniversary comes up August 1st, is that which one it's gonna be? Yeah, yeah.
We've been talking about this tax business for the entire length of time that I've been hosting this remarkable program, and it still needs to be said. It still needs to be said. This is how successfully the Democrats have demagogued all this. By the way, if you're on hold, you hang in there and be tough. We're gonna get to your calls here after the monologue segment's over. This, by the way, happened after the Reagan tax cuts, too. The rich saw their taxes go up -- although that's not quite the way to say it. They lowered tax rates on the rich (Reagan did it and Bush 43 did it), and yet the rich ended up paying more taxes. If you're shaking your head and you've not heard this explained before, I can understand how you think I'm gonna start lying to you.
You're gonna think the math on that makes no sense. "How in the world can you cut people's taxes and they ended up paying more?" It's very simple. Let me go back. Here's a Wall Street Journal piece, July of 2008. Bush tax cuts raised taxes on the rich hugely. "Washington is teeing up 'the rich' for a big tax hike next year, as a way to make them 'pay their fair share.' Well, the latest IRS data have arrived on who paid what share of income taxes in 2006..." Now, remember, the data we've got, 2008, is the most recent data. These numbers gotta be even worse now after two years of Obama.
The 2008 data: The top 1% pay 38% of all income taxes, the top 5% pay 58%, the top 10% pay 70%. That's in 2008. In 2006 is what this story hits the Wall Street Journal. The top 10% in income, those earning more than $108,904, paid 71%. Barack Obama says "[T]he latest IRS data have arrived on who paid what share of income taxes in 2006, and it's going to be hard for the rich to pay any more than they already do. The data show that the 2003 Bush tax cuts caused what may be the biggest increase in tax payments by the rich in American history. [T]he top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years."
You want to hear another number? I don't know if this is still true, but this was true back in the eighties. When I first started educating myself on this, and I tell you, when you first started educating myself, the lights that were going on in my head were like miniature explosions. I learned that if you earned -- this is in the eighties, and I did not earn $50,000 a year. I wasn't anywhere close to it. Well, I take that back. No, that's true. I didn't earn $50,000 a year until '88. Anyway, I get sidetracked. If you made $50,000, you were the top 10%. If you earned 50 grand a year or more you were in the top 10%. I know you don't believe it but it was true.
Now, I'll give you another statistic. Back when I worked for the Kansas City Royals, I was in sales and marketing. The National Football League was big then, but nothing like it is now. The NFL sent marketing ideas out to all their member clubs -- and the Chiefs were right across the parking lot. We knew the guys there, and one of the Chiefs guys gave me a poster that the league had sent them. I'm paraphrasing it but it went something like this: "If you know that more people bowl in a week than watch NFL games in a season, then you know America." Yep. You probably are as shocked to hear that as you are to hear that back in the eighties, if you earned 50 grand you were in the top 10%.
Now, I don't know what the 10% number is now. I'm telling you, Snerdley, this had to be 1979 or '80. "If you know that more people..." I can still see the poster. We hung it up. We thought it was a good marketing thing for us to learn. "If you know that more people bowl in a week than watch NFL games in a season, then you know America." You could probably say the same thing about NASCAR. At any rate, "The data show that the 2003 Bush tax cuts caused what may be the biggest increase in tax payments by the rich in American history. [T]he top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years.
"The top 10% in income," ah, okay, it doubled, "those earning more than $108,904, paid 71%." Now, some of you in this audience I'm sure earn a hundred some odd thousand a year, and it's not bad money. How many of you have ever thought of yourselves as being in the top 10%? It's $250,000 a year where Obama wants to start -- and, by the way, that $250,000 a year is no accident that Obama chooses to raise taxes on. His next assault with these tax increases is going to be on small businesses. That's who he next wants to destroy. (interruption) I know.
Snerdley is complaining to me here that $108,000 in New York, you're barely making it, and yet you're top 10% in the country. The top 10%, same thing... (interruption) I know, Snerdley! (interruption) I know! This is my point. (interruption) Snerdley is sitting here like he can't believe this. It's true! You can sit here and argue with me all you want, you can say $108,000 doesn't add up to much in New York City or California, but it still puts you at the top 10% of people who earn an income in the country. "The top 10% in income, those earning more than $108,904, paid 71%." Now, how does this happen?
By the way, this business about taxes and revenue is a misnomer because that's not the purpose of taxes for liberals. This is another thing that you're gonna have to unlearn. If you believe that whenever liberals talk about people not paying their fair share and all that, we gotta raise taxes on them because the government's unfunded, underfunded, and they've gotta pay more, it's not at all. They just want the money to redistribute. They don't want to pay it to pay down the debt. Liberals don't care about the debt -- and, by the way, when to look at anything other than percentage.
The reason they say the rich don't pay their fair share they're ignoring all the numbers I've given you. They look at a rate of 35% and say it's unfair, pure and simple. But here's the answer to the question: How is it Bush can lower tax rates? They were 39.6% under Clinton and he took it down to 35 or 36, one of those two numbers. I keep getting confused on it. Whatever, how did lowering their rate -- let's say from 39.6 to 35% -- raise their taxes paid? The answer to that is very simple, and it's crucial, because there is something that happens when you lower tax rates. The first thing you do is create a positive outlook and attitude on people who hire other people.
You create a positive financial outlook on people who invest their money in the growth of their business, and you end up creating more jobs. As tax rates lower, small businesses have more money to grow. They're not sending as much to Washington; they keep it. They can hire more people. They can invest in the growth of the business, which is what they want to do because that's where everybody involved in the business benefits. Is when it grows. When the business grows, large and small, it obviously creates more revenue and more people are hired -- and that's called the tax base. So you have more people earning income. More people paying taxes.
So where it may not be the case that the individual rich guy sees you his personal income tax bill go up, there is an increase in the number of rich guys paying taxes so that there is more revenue generated, i.e (or e.g.), a greater percentage of revenue raised is paid for by high earners. By the same token if you raise people's taxes -- small business, whatever -- you are going to reduce the amount of money they have to grow. They're not gonna grow at all. They may have to fire people, certainly not give them raises, and the tax base shrinks. There are fewer taxpayers, but, "Hello, unemployment benefits! Hello, deficit. Hello, loss of revenue to the government."
There's nothing good that happens from raising taxes other than liberals get to convince their idiots that vote for 'em that the rich are getting screwed, and that makes 'em happy so they vote for Democrats. Pure and simple. There's not one good thing that happens when people's tax rates go up. Not one. But there are all kinds of great things that happen when they're reduced, and when tax cuts happen -- when tax rates are lowered -- more people are hired, businesses grow; the people at those businesses earn more money. They get raises. Their income levels go up. They end up paying more taxes, as a group.
The way these stories are written is sort of a misleading thing: The rich paying higher taxes. Bush tax cuts raise taxes on rich hugely. It did, but because it created more rich people paying more taxes at a lower rate. So if the purpose of the tax code is to raise revenue to run the government, lowering taxes is what you want. If the purpose is to redistribute income, still: Lowering taxes what you want. But if you don't care about the deficits involved, then it doesn't matter. You raise taxes all you want, and make the 90% of people who are not in the top 10% love you, 'cause you're getting even! You're screwing the top 10%. So the Democrats have opted for what?
No fiscal responsibility, the total redistribution of wealth, making everybody poorer in exchange for what? More votes for them and entrenched power. Now, my point is in this Wall Street Journal story. It's documented here. "The ranks of U.S. millionaires nearly doubled to 354,000 from 181,000 in a mere three years after the [Bush] tax cuts." That's why the rich were paying more taxes. The number of millionaires almost doubled, which is why the money from them went up. There were more of them. That's how it happens. Individually, they're paying less taxes; as a group, the government's making a killing off of them -- and everybody thinks, in their Civics 101 mode, "We have taxes to fund the government." No. For Democrats, that's not why you have taxes. You have taxes to redistribute the money to people whom the only reason you're giving them the money is to vote for you, not even to improve their lot in life (because it doesn't do that).
RUSH: Now, individually, folks, the rich still pay more -- and there's a simple reason for that, too -- after the Bush tax cuts, and the same thing after Reagan, because there was less reason to hide income. If you tell somebody that they're gonna get to keep 70% of every dollar they earn instead of 60%, they'll go to a lot less trouble finding shelters and hiring lawyers to come up with ways within the tax code to avoid paying taxes. Look, it's a marvelous bit of reality. Lower people's taxes, and all kinds of magic happens -- and we're not anywhere near the point where taxes are too low. There is a point where if you lower taxes too much, of course, all this doesn't apply.
By the same token if the tax rate was zero the government's gonna end up with nothing. We don't have that, but we're still at high enough tax rates that there's enough room to lower them to still create this boom. The end of the Wall Street Journal piece spells out why the rich still pay more individually than when taxes were high, like during the Carter years. It's because they either worked less, they earned less, or they found ways to shelter income from taxes so it was never reported to the IRS as income. And, by the way, all these numbers I've given you are IRS numbers. They're not CBO. They're not Tax Foundation. They're IRS numbers, in terms of how many millionaires there are, what their tax rates were, what everybody paid. IRS numbers.
Some people just stop working at a certain income level. "Okay, fine. I got enough, why if I'm to give up 40%? By the time you add state, if I have to give up half or over half what I make to tax authorities, why the hell earn it?" which is what a lot of people do. So there's no argument for raising taxes, especially now, because the example I give: You want to choke off whatever lame recovery might be going on, raise taxes. That's what Obama's gonna do on $250,000 a year income or higher, and that's small business and it's gonna wipe 'em out. Do you realize that if Obama was the governor of a state, his state would have defaulted by now? Because states can't print money. If Obama were a governor, couldn't raise taxes enough to matter. His state would have defaulted.
Here's Greg in Cincinnati, as we kick off the phones today on the EIB Network. Hello, sir.
CALLER: Hi, Rush. It's an honor to talk to you, sir.
RUSH: Thank you.
CALLER: I just had one example for you of the redistribution you've been talking about.
CALLER: I did my brother-in-law's taxes this year just like last year, about the same. He paid a hundred dollars in federal taxes. He's gonna get back about $1500 back just because of the Make Work Pay Credit.
RUSH: Make Work Pay Credit. Exactly what I was talking about, one of the infinite number of credits out there that create Democrat voters.
CALLER: Exactly. Again he got about the same amount last year, $1500.
RUSH: Make Work Pay Credit.
CALLER: For paying nothing.
RUSH: Yeah. The Make Work Pay Credit. What did you say, you said a hundred or is that figure no longer relevant? Is $1500 is the number you meant to use?
CALLER: Well, he paid $100 in federal taxes. He's going to get back $1500.
RUSH: He paid $100 in federal taxes.
RUSH: This is making me sick. You know, I finally wrapped mine up last night. All week it's been back and forth with the accounting team, and last night came that moment in time: Write the check. (interruption) No, no. For the first quarter of this year. My taxes for the current year, that's done. I always end up owing a little on purpose. I don't want a refund. But it's still... (sigh) I spent all week working it and then they shoot you the number. I mentioned this on Friday during the radio Cure-A-Thon. Somebody wanted to know how great must it feel to be able to write a check of the amount I said I was gonna donate to the leukemia society.
"Gosh, Rush, that's gotta feel good to be able to do that for people."
It is. This was... (laughing) Last night, there is no comparison. Yeah, I remember reading... Who was it? What was the clown's name at USA Today? Allen Neuharth was a forerunner to Trump in a way. He wrote columns about how much he owed in taxes every year, how much he paid and how proud he was to be able to write that check, how patriotic it made him feel to be able to write that check. And I think he was talking about owing couple or three million and how proud he felt.
RUSH: Fort Wayne, Indiana, Andre, glad you waited. You're up next, sir. Happy to have you here.
CALLER: Happy to be here. Thank you so much for all you do, Rush.
RUSH: You bet, sir.
CALLER: Mega mega dittos.
RUSH: Thank you very much, sir.
CALLER: You know, as you talk about the whole tax situation, everything you say is completely logical. It's factual, it makes total sense, and it frustrates the heck out of me every time I hear it because we're at a point in our country where we can no longer have rational debate with Democrats who are liberal. Maybe we never could but there's no point-of-rational debate anymore. We're at that point, now, where we're in a battle between makers and takers and what worries me so much at this point is the [t]akers will continue to vote themselves largesse out of the Treasury. They'll continue to vote themselves the money out of the government which means they'll continue to vote for her Democrats and as we keep going and the Baby Boomers are aging, the proportion of makers to takers will continue to increase, and so there has to be something done to bring that balance back because there won't be enough [m]akers in the future.
RUSH: There won't be enough makers. You had 'em reversed throughout your example. More and more takers and so that requires more and more redistribution, which my point today about that is: Yeah, spending is bad enough on its own, but it's how it's being spent. It's being spent in ways that stifle the creation of wealth. It stifles individual prosperity. We're spending money to depress economic activity and to keep people stupid. The takers are up now to 47% at least; 47% do not pay any income tax. Forty percent get money back on all the various earned income credits of various kinds. So the takers are on a roll. The takers are a run for it.
I appreciate your comment too. The first hour and of here on taxes and the economy, it ought to be on a DVD that's taught in schools. It ought to be. It's just pure common sense, pure mathematics, pure economics. It's just fact. I know the incidents even arguable, other than ideological. He talked about how we've got to change the way we deal with these people. This is interesting. A guy named Joe Walsh -- a Tea Party guy, Tea Party freshman -- in the House was on with Christiane Amanpour on This Week with Christiane Amanpour on Sunday and he's from Illinois. She said, "There's so much evidence even going back to Reagan where he did tax cuts and in fact the debt increased, then he had to make tax increases. Can you really cut public spending by that amount and just expect to balance the budget?"
WALSH: In the eighties, government revenues went UP. We didn't cut spending. Revenues went up in the eighties. Every time we've cut taxes, revenues have gone up. The economy has grown. Look, Christiane, I've said this before: The president of the United States ought to be ashamed of himself, and I don't know why your profession hasn't gotten on him more. Two months ago he presents a budget and doesn't talk about entitlement reform -- and then all of a sudden last week he gets a redo? The Republicans are leading on this perfectly prepared to take whatever political hits we have to take because the crisis is so severe.
AMANPOUR: That! That! That! That! That!
WALSH: I wish you'd be part of this.
RUSH: Christiane Amanpour is still locked in her own narrative just like Schieffer was earlier in the program. "W-w-well, what do you mean?" You cut taxes like Reagan did and look at what happened! The deficit went through the roof." It didn't. Federal revenues to the Treasury doubled in the eight years of Ronald Reagan. The amount of money generated via income taxes doubled during the eight years of Ronald Reagan. That's what he's saying: "You ought to know a little bit more about this, Christine. You ought to know a little bit more about what you're talking," is what he was essentially saying to her.END TRANSCRIPT