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Middle Class Got Creamed in Cliff Deal

BEGIN TRANSCRIPT

RUSH: "Workers Making $30,000 Will Take a Bigger Hit on Their Pay Than Those Earning $500,000 Under New Fiscal Deal -- Middle-class workers will take a bigger hit to their income proportionately than those earning between $200,000 and $500,000 under the new fiscal cliff deal, according to the [supposedly] nonpartisan Tax Policy Center. Earners in the latter group will pay an average 1.3% more -- or an additional $2,711 -- in taxes this year..." This, by the way, is just the FICA tax, I believe, 'cause there's a lot more...

They're gonna be paying a lot more than $2,000. (laughing) That's just on this one tax, the payroll tax. The people that earn "between $30,000 and $200,000 will see their paychecks shrink by as much as 1.7%," and 1.7% of 30 grand is a lot more than 1.3% of 500 grand. So the people that make 30 or 40 grand are going to be out about $1700. The people who make 500 grand are gonna be out $2700.

Now, the theory is that if you make 500 grand it's easier to miss $2700 than if you make 30 and miss $1700. And, by the way, folks, this is all true. And, you know what? There's nothing that can be done about it unless you confiscate the money from the rich. There's just no way that this is ever going to change. It's mathematics. And this leads us into an argument debate over flat tax.

One of the reasons a flat tax is gonna have such a tough time is if you have a 20% tax rate for everybody, well, 20% of $1 million is a lot less than 20% of $70,000, let's say. So the critics will come along, "That's just not fair! You need to be taxing those people that are a millionaires at 80%!" By the way, some Democrats are suggesting that we go back to a top rate of 70% now. That's what it was pre-Reagan. Because the notion is...

I'm telling you what's on tap here. I'll tell you what's really the idea. It's not really Bush. I'll tell you what's on tap here. The Democrat Party and Barack Obama -- particularly Obama. Obama has a lot of admiration for Reagan in a politically sense, not policy-wise. Obama's admiration for Reagan is in the sense that Reagan was a truly transformational president. Reagan genuinely changed the trajectory of this country.

He changed the overall foundation of this nation and its economy with Reaganomics (supply-side, trickle-down, whatever you want to call it). Now, Obama hates that. He hates Reaganomics. He wants to be as transformational a president as Reagan was, and what he seeks to do is erase every trace of Reagan from America, particularly economically. That means erasing the whole notion of lowering tax rates to grow an economy.

Lowering tax rates to allow people to keep more of what they earn, lowering tax rates to create more jobs, more tax revenue? That's what Obama wants to dispense with. That's what he wants to do away with. That's what's happening here, what is really the objective, and the light went off for me when I saw it. It was just this week. A number of Democrats are actually suggesting this. They're trying to be intellectually honest about it, or they're trying to sound intellectually honest.

They are saying that the economy's on solid-enough footing now and that Obama has proven that raising taxes (and Clinton proved it, too, by the way) causes economic growth. Remember, that's the big lesson from Clinton. The Reagan tax cuts were reversed by Clinton, and retroactively. And the Democrats want to say that the economic boom of the nineties was because taxes went up. And a bunch of their low-information voters believe it.

So the theory is: "Raise taxes again now so economic growth takes place," which it won't, but the government will grow, and Santa Claus gets bigger, and Santa Claus gives away more. So the appearance is it's growing and it's doing great. So the Democrats are saying, "Since Obama has brought about a recovery by raising taxes and eliminating loopholes, we can go back to a 70% rate."

I'll tell you right now: The Republicans in Washington are clueless. The Republicans in Washington will hear a Democrat say that and you know what their reaction will be? "Oh, come on! (laughing) Come on, 70%? Be serious! Ha ha ha! We're never gonna go back to that." Meanwhile, the Democrat are gonna make every move possible to get back to it. This is one of the big problems: Nobody takes the Democrats seriously.

The Democrats and Obama, oftentimes, will tell us exactly what they're gonna do. And it sounds so outrageous, nobody believes 'em. Then they embark on it, and they get it done on occasion. So they are making a move, and I'm just telling you right now what Obama's number one objective is. Well, it's hard to say number one. But in his top five is to erase all vestiges of the Reagan years; to have an entire and total, complete revision of the history of the Reagan years.

The Democrats are bothered by that as much as anything in American history bothers them: The success of the Reagan years. It's a big threat. The success of the Reagan years was one of the biggest threats the Democrats ever faced, because the success of the Reagan years demonstrated how wrong Democrats are, how dangerously wrong they are. That's why there's been a constant rewriting of history ever since Reagan left office, and even while he was in office.

So just don't doubt me. Their express purpose now is to see to it that, for example: In your average high school history textbook, the largest reference to Reagan will be a paragraph, and it will be about how Reagan destroyed this group and that union and how Reagan was responsible for AIDS, and Reagan was against gay rights, and he was against all these social changes.

That's the objective. That's what's being undertaken now. I'm not trying to depress you. I'm just trying to get you prepared. When you then move to the Republican Party side and you understand that some Republicans didn't like Reagan? They didn't like conservatism. Some Republicans are big government guys. That's where the power is. It's where you get your hands on the money.

Reagan was about returning as much money to people who produced it and own it as possible.  So that's what's underway now.  And Obama doesn't have much opposition to this.  His primary opposition is here on this program and certain other talk shows, but there's not much opposition to Obama in the government.  There's not much opposition to Obama in the blogs.  There's not a whole lot of opposition to Obama in conservative media.  But there certainly isn't any opposition that he faces, not serious opposition, in Congress.  They pretty much let him have what he wants so that people don't dislike the Republicans.  That's their mind-set. 

While all this is going on, everybody in this country is getting soaked, and that's the point of this UK Daily Mail story.  "Middle-class workers will take a bigger hit to their income proportionately than those earning between $200,000 and $500,000 under the new fiscal cliff deal. ... Nearly 80 percent of households will pay more money to the federal government as a result of the fiscal cliff deal."  Not 2%.  Eighty percent.  You know where the 20% that won't is?  It's what we discussed yesterday:  asset wealthy people.  Think Warren Buffett, who after the fiscal cliff deal, who after Obama has raised taxes on the rich, Warren Buffett's tax rate will remain lower than his secretary's. 

Think Jeffrey Immelt of GE. Think hedge fund people, specifically hedge fund people because they are governed by something called the carried interest loophole which is a very complicated thing to understand in-depth and in detail but essentially what it is, you know, hedge funds invest other people's money, and the money that is earned, the gain, the income is not taxed at income rates, i.e., 39.6%.  It's taxed at 20%, the capital gains rate.  And that's really what you need to know about carried interest.  And those are the truly rich people in this country, the asset wealthy, people who do not ever worry about the cost of anything and yet don't have any income, as defined by the IRS as income.  They have income, but it's capital gains income, income from investments, or it's carried interest, and they pay 20%. 

Now, yeah, they were paying 15, and there is a 3.6% Obamacare surcharge.  So they're paying more.  But they're not paying what the guy making $50,000 is making proportionately and they're not paying what the guy making two million is paying proportionately.  "Eighty percent of households will pay more money to the federal government as a result of the fiscal cliff deal.  For most households, the payroll tax takes a far bigger bite than the income tax does." By the way, a lot of these people that see their paychecks getting smaller are people that don't pay income tax.  What is it, 47, 48% of Americans don't pay any income tax.  That's the result of Democrats and Republicans trying to get voters in the lower strata of the middle class. 

There's no income tax, but they pay Social Security tax.  They pay payroll tax.  And their payroll taxes just went up about 2.4%.  So that can be as much as 15, $1,700 a year, divided by however many weeks they get paid in the year.  So, while Obama and the Democrats are celebrating, telling everybody only 2% of people are seeing a tax increase, guess what?  In fact, they're actually running around talking about tax cut, because on January 1st, the Bush tax rates expired and everybody's rates did go up.  Then the next day they agreed to the deal.  So for 12 hours there was a tax increase that nobody paid, but it was on paper, then the Democrats got to say, "We cut your taxes."  The rates stay the same but it was called a tax cut.  And now these people are waking up to tax increases on their payroll side.  So we'll see.

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