RUSH: This is from none other than the New York Times. “Middle Class Shrinks Further as More Fall Out Instead of Climbing Up.” It’s a long story with lots of charts, which are worthless to me. I can’t read a chart to you or show a chart to you. I can describe a chart to you, but it’s full of them. The pictures are of sad, very sad middle-class people. Now, here’s the thing about this story.
Who’s been the president the past six years, now near seven? It’s Barack Hussein O, right? And here in this story about the shrinking middle class and people falling out of it instead of climbing up in it, there’s no connection made whatsoever between Obama economics and this New York Times story about the sad plight of the middle class. Do you know what this story’s about? This story is about the New York Times being so happy Obama’s talking about it.
But there’s nothing in this story that would associate Obama and his policies with what’s happening in the middle class. We have 93 million Americans not in the workforce anymore. That number has, again, skyrocketed in the last six years. It’s directly traceable to Obama policies. But Obama’s now talking about the middle class and raising the middle class up and doing things for them. He’s gonna lower this income inequality gap, right?
How’s he gonna do it? Well, he’s gonna tax the rich again. That’s really gonna help. Okay, so we have income inequality. The rich are getting richer and the poor are getting poorer and the middle class is disappearing. So the solution is to do what? Tax the rich? And then do what with the money? How does taxing the rich help somebody in the middle class rise up? Can somebody explain this to me? I’m serious. (interruption)
No, no. I’m serious. I’m not trying to be facetious. I want to know how raising taxes on… Pick a name. You’re gonna raise taxes on Trump. You’re gonna raise taxes on Bill Gates. You’re gonna raise taxes on pick your favorite rich guy. You’re gonna raise taxes on that person. Somebody tell me how, John Q. Public in Des Moines, Iowa, is raised up in the middle class because Bill Gates is paying more taxes. I want to know how this happens, ’cause Obama, that’s what he’s saying he’s gonna do.
What, is he gonna create a new government program that’s somehow gonna benefit you? What government program’s gonna raise you up in the middle class? What government the program’s gonna do it? What government program is gonna give you more economic independence, which is more money in your pocket, more disposable income, more money to spend? That’s economic freedom! Economic freedom is more of your own money to do with whatever you want. Economic freedom is not some government program that’s gonna give you a tax credit for some silly behavior you have to engage in.
That doesn’t raise the middle class. It doesn’t do anything for them. All does is make government bigger. But let’s take a look at a government program that was designed to actually give the middle class more money. It’s called the 529 program. Many of you may have put money into it. The 529 program is to education what a medical savings account is to health care. The 529 program is to education what a 401(k) is to your overall budget.
If you have children and you’re gonna be someday sending them to school, you can donate money off the top of your salary before it’s been taxed into your 529 again. The money that’s in your 529 account is there before it’s been taxed so it’s tax-free, and you are free and able to withdraw that money to use for your children’s education. At no time will you be taxed on it. It’s entire tax-free, and it was set up as an incentive to promote education and to give people a break, because they think educating their kids is of paramount importance.
So it’s a program that’s designed to inspire people to put away some money, not pay any tax on it, for their kids’ education. All fine and dandy. And the usual penalties. If you decide to withdraw some money from that 529 account for anything other than your kids’ education, you pay a penalty on it (i.e., you’ll finally pay the tax on it). If you withdraw money from that 529 account to go out and buy a new car, you get taxed on it. If you draw money out of that 529 to do anything other than educate your kids, you will pay tax on it.
Obama has proposed a change to the 529 program.
Would you like to hear what it is?
Obama now wants, as part of his plan, to tax the rich, to make it so if you withdraw money from your 529 account for your children’s education, you will now pay a tax on it. In other words, you have been lied to. You will have to report the money that you withdraw from your 529 account on your tax form as income. So if I just use round numbers, let’s say $5,000 in your account, and it’s time for your kids, you know, pay for ’em to go to some school.
I don’t know what schools qualified, if it’s a private school, if it’s college only, but let’s say it’s juco [junior college]. Oh, I can’t use juco because that is now free. Ahem. Let’s say you want to send your kid to a private school and high school. Let’s say it’s gonna cost $2500. Where do you think you’ve got that? “I’ve got $5,000 right there in my 529 account, and it’s tax-free. So I’ll just go get the money there, pay the tuition, and I’m home free.”
If Obama gets his way, you must add the $2500 you take out to your gross income and pay income tax on it. Obama’s theory is that you got an unfair break by not being taxed on that money in the first place. Now, the irony of this is, of course, this is a middle class program designed to help the middle class educate their kids. Obama comes along and says he’s gonna raise taxes on the rich, and everybody goes, (applauds).
“Yeah, bud! You raise taxes on those rich. We hate the rich. You sock it to ’em up there.” But you’re not the rich, you’re the middle class, you got 529 money over there and you withdraw some of it to educate your kid, and all of a sudden H &R Bock, whoever’s gonna tell you, “Ah, ah, ah, ah, whatever you take out of there you gotta pay income tax on.” Ladies and gentlemen, don’t doubt me on this. Glenn Reynolds, a law professor…
We talked about this last week. Glenn Reynolds, professor of law at University of Tennessee, has a big USA Today column on this, and it’s just more of the same. This is Democrats and liberals doing the exact opposite of what they are claiming to do, what they are promising to do. This is Obama claiming to be for the middle class as he proposes to raid your 529 savings account to pay for this crack-brained, utopian, “free” community college.
That’s how gonna pay for it. They’re gonna pay for free community college by taxing you on your 529, and whatever else they need to pay for. Remember dear old Margaret Thatcher? “The problem with socialism is eventually you run out of other people’s money.” So now Obama’s moving on. He’s moving on to the money in the middle class, the people that he and Hillary are going t obe concentrating on for votes. The people that he claims he’s got their backs. He’s gonna make sure the rich pay their fair share.
He’s gonna tax money that was saved with the promise it would not be taxed, and you’re gonna have to pay income tax on it the minute you withdraw it, even if it’s for the express purpose you put it away. Snerdley’s looking at me, “How can that be?” ‘Cause they lie. That’s how it can be. What are you gonna do? He’s gonna change this unilaterally; it’s gonna become the law. What are you gonna do? The… (interruption) They devised a program, a 529 program, much like any 401(k) or medical saving account.
You put the money for your kid’s education away, and we will not charge you any tax on it, take it off the top of your salary every two weeks, month, however you, and you put it in there. There’s a maximum you can contribute. If you take it out for any other reason, you pay tax on it, take it out early, pay tax on it. But if you wait and only withdraw money from the 529 account to educate your kid, no tax. Now you’re gonna pay tax when you withdraw the money.
Because Obama’s promising other people free community college, and who knows whatever the heck else.