RUSH: Here is John in Shelbyville, Kentucky, as we head back to the phones. I’m glad you called, sir. Nice to have you with us. Hello.
CALLER: Thanks, Rush. Thanks for taking my call. So I guess full disclosure, I’m probably a bit to the left of most of your listeners. I’m a Bernie Sanders supporter, and I don’t normally think very much of Donald Trump. I’ve actually for a long time thought that Ben Carson seemed like sort of an adult one of the few, but I was amazed last night because there was a point between the exchange between Donald Trump and Ben Carson where I think Donald Trump actually made himself look pretty reasonable and made Ben Carson look a little bit insane.
I’m talking about when they were talking about the graduated taxes. Ben Carson came out and said that something like a progressive tax system is an element of socialism, which is obviously insane, and Donald Trump called him out on it. I guess I’m just wanting to get your commentary and what you have to say about Donald Trump sort of splitting from the Republican line like that.
RUSH: Okay, I had real trouble — you’re on a cell phone and I’m having to follow you here on transcription. So you want to get my commentary on what I have said about Trump splitting from the Republican line? Okay, that’s what I didn’t get. What did Trump split from the line on?
CALLER: Most Republicans I’ve heard say that something like a progressive tax systems which aims to redistribute wealth is something to do with socialism, which obviously it isn’t, but that’s what a lot of Republicans say. And it was interesting to hear Donald Trump come out and say it’s actually not true. Which it’s not true. I guess really I’m just asking what you think about Donald Trump splitting from the unified line that Republicans give that progressive tax code is socialist?
RUSH: Well, I’m kind of hedging or hesitating here because I don’t remember what Trump said other than he’s gonna go after the hedge fund guys.
RUSH: I’m gonna be honest with you, I gave up on this debate at 10 and 20 minute splotches about two hours and 10, 15 minutes into it. I got up and started doing other things. Yesterday was iOS 9 day, guys, and frankly I wanted to play with some things on my iPhone and I figured two hours and 10 minutes was plenty of devotion. So I got up. I must have missed this. I must have missed this exchange between Carson and Trump on taxes. I’m not trying to evade you.
CALLER: No, no.
RUSH: Did Trump say that he is in favor of a graduated income tax and the rich should pay more?
CALLER: Exactly. You summarized it perfectly.
RUSH: That’s what he said. Did he say the rich aren’t paying enough now?
CALLER: Well, he always said a graduated tax system is what we’ve had for a long time. It’s been over a hundred years, and it was Abraham Lincoln who imposed the first progressive taxes and his point was that we’ve had it for a long time. We haven’t been a socialist country
for a hundred years. So it stands to reason that this is not actually a socialist thing as Ben Carson was suggesting. And as I’ve heard many Republicans suggest.
RUSH: Okay. I’m still having trouble. I can’t understand what he’s saying. This is embarrassing for me. I’m trying to associate what you’re saying with the fact that you said you support Bernie Sanders. I heard that. So I’m wondering if you’re contentious. I really can’t understand a word you’re saying. This is a great illustration, you’re on a bad cell connection and I’m having to follow this on a transcription of what you’re saying, plus I’m hampered by not knowing what happened here.
CALLER: Right. I understand.
RUSH: So I’m trying to put all this together and I’m asking myself are you doing a gotcha on me or are you actually asking an open-ended question about —
CALLER: I certainly wasn’t trying to do any sort of gotcha. It wasn’t something that I haven’t heard the Republicans say, and I know that you’ve been I guess more fair with Donald Trump than most commentators have been, and I thought that it would be interesting to hear what you had to say about this sort of interesting line that Donald Trump said.
RUSH: Well, then let me just assume that what — maybe some people are gonna confirm. Did Trump — I’ve heard him say he wants to raise taxes on the hedge fund guys, get rid of carried interest because they’re getting away with murder. Beyond that, what did Ben Carson say? Would somebody tell me what Ben Carson said, just what did he say. Not you, John, not you. What did Ben… (interruption) Okay. FairTax, single rate or two rate tax at 50, so Carson… (interruption) Okay, so the progressive — (interruption) Oh, okay, so we got a Bernie Sanders guy here ticked off that Carson called a progressive tax system socialist.
So the Bernie Sanders guy’s ticked off about that or — not ticked off, but that got his. So here comes Trump basically agreeing with him and Sanders. Is that right? (interruption) Trump says it’s not socialist, and John here likes that. Okay, ’cause you started out by saying you thought Trump sounded more reasonable than Carson did, ’cause Trump agrees with you. You want the rich soaked and you think you heard Trump say that he wants the rich soaked, and that’s the way America’s always done it, so now you want my reaction to that. Is that it?
CALLER: Not exactly.
RUSH: Are you telling me we’re still not there yet? (laughing) I’m being so patient here trying to get this done.
CALLER: Okay, so what was your question?
RUSH: I just want to know do I understand what you’re asking me now?
CALLER: I think so.
CALLER: Yeah, I don’t think you’ve misrepresented anything I said.
RUSH: Okay, if Trump is opposed to the FairTax or if Trump is okay with the current graduated tax and doesn’t want to do anything about it — I thought I heard him say last night that we’re overtaxed. I thought I heard him say last night that he wants a middle-class tax cut, but he doesn’t want to do anything about the top marginal rates apparently? Wants to hit the hedge fund guys. I’m still hampered here by not knowing precisely what Trump said.
Here it is. “We’ve had a graduated tax system for many years. It’s not a socialistic thing.
What I’d like to do, and I’ll be putting in the plan in about two weeks, and I think people are going to like it, it’s a major reduction in taxes. It’s a major reduction for the middle class. The hedge fund guys won’t like me as much as they like me right now.” And he didn’t condemn the graduated tax system. Look, now I’m down to five seconds. John, do not turn the radio off. I’m gonna answer this after the break. I’m sorry it took me this long to get to where you started.
RUSH: Okay. I have now availed myself of the transcript of the portion of the debate I was asked about. And the nub of it is Ben Carson claims that the graduated tax system is socialist. I’ll tell you where that comes from, a lot of people do. You can find references to it in the famous Communist Manifesto. The Communist Manifesto has 10 things that if you accomplish all of them, you have succeeded in converting your society to socialism on the way to communism. Graduated income tax is one of them. Public education’s another. Probably many of you are very well aware of this.
Where were these guys last night? These guys were in the Reagan library. What did Ronald Reagan do? When Ronald Reagan took office in 1981 the top marginal tax rate was 90%. And the amount of money raised by the tax code was about $500 billion back then. When Reagan left office in 1989, there were three tax rates, essentially two, but there was a 31% bubble in there. But the top 90%, that marginal rate of 90% had been dropped to 28%. And the amount of money generated by the tax code had doubled, almost a billion dollars, by reducing tax rates.
So the history of conservatism and the Republican Party where taxes is concerned is to reduce rates, reduce marginal rates, have as few brackets as possible, and of course the FairTax or flat tax, variation of the two, is now popular. It doesn’t serve any purpose whether graduated tax is socialistic or not. Ben Carson said it is; Trump disagreed. On this I’d have to say that it doesn’t — he talked about raising taxes on the hedge fund guys which is carried interest, and he says he knows a lot of people making $200 million who are not paying much tax and that isn’t fair.
And that is indeed the kind of talk you do hear from people in the Democrat Party and on the left. It usually is uttered by people who are trying to build a bridge of commonality. “Hey, man, I understand your plight. You know, I’m a rich guy, but, you know, I don’t think we rich people should be getting away scot-free. We should be paying more taxes,” and so forth. I don’t know if Trump was doing that or if he really believes that we need more rates and higher rates. But if he does believe that, then I would disagree with that profoundly. No way on earth do we need to enhance the graduated income tax system and start raising rates on people. It does not create more revenue, it doesn’t punish anybody, especially now since all the deductions are gone.
Nobody ever paid that 90% rate. A marginal rate is what you pay on the last dollar you earn, the way the rates are structured. You don’t pay 90% on everything. Back in the day where the 90% rate was the top rate, let’s say there were eight brackets, say there was 10%, 15, 20, 30, 40, 50, go all the way up to 90, but you had to earn back when that rate was in effect, I don’t know, I’m guessing $300,000 before the 90% rate kicked in. It was only on the amount of money you earned above the previous bracket. It wasn’t 90% of everything.
But there were all kinds of shelters and deductions back then, and that’s what Reagan simplified, got rid of all that with just two rates, 15 and 28%. And revenue doubled. Now, there was a bubble for some people of 31%, depending on where their income fell, but it was basically at 15 and 28%. And then everybody predicted once Reagan left, that was the Tax Reform Act of 1986, when Reagan left, here came the increases again, minus the deductions. And now we’re up to 39.6, the top marginal rate was 35, and it doesn’t need to go any higher.
Carried interest, hedge fund guys, Trump has a point there, those people are paying 15%. It’s just a name. Carried interest is just a title so that they’re not charged with earned income. Carried interest, it’s meant to confuse people. It’s the industry taking care of itself. It’s like doctors speaking doctorese, lawyers speaking lawyerese. This is finance guys speaking financese.
What’s carried interest? “Well, carried interest is where you make interest here but you don’t take the charge, you carry it over to the next one. You keep carrying it, keep deferring the taxes, you carry the interest, and finally you don’t pay taxes until you’ve gotten rid of the interest you’ve carried, the income, so that you’re really reducing what’s taxable.” It’s a convoluted thing. It’s simply a way to pay taxes at 15%. And that’s what Trump is talking about, and my guess is —
Hedge fund guys, some people think all they do is sit on their butts and siphon off money that they get other people to give ’em in the form of investments or whatever. It takes all kinds of people with all kinds of opinions about people. I have no thoughts on hedge fund guys. I don’t deal with them so — and not every one of them is a billionaire, another popular misconception. But it has long been a focus of many people, particularly — except you don’t hear many Democrats talking about carried interest, do you? You don’t hear many Democrats trying to get the carried interest eliminated.
Obama surely didn’t. He might have given it lip service now and then, but never made a move on it. Those are his voters. Those are his donors. Who do you think the donor class is? Carried interest guys. Not just carried interest guys, but a lot of them are in the donor class, and Trump has signaled that he’s going after those people. He’s not gonna be beholden to them. He doesn’t want their money, and he’s tired of them running the show in Washington.
So I think in that sense it makes sense that he’s going after carried interest. If he wants to raise everybody’s marginal rates outside the middle class, no, no, no, no, I mean, it’s not helpful to the economy, it’s not helpful to anybody. You know, Ronald Reagan, he never said it, but the whole point was, why are we gonna punish achievement? Which is what the Democrat Party does. Why are we gonna stigmatize achievement, run around and tell the successful they’re not paying their fair share?
The successful… You know what we’re up to now? What is it, the top 10% are paying almost 50% of all taxes, or maybe it’s top 1% are paying 40%, something like that. And then maybe it’s the top 10% paying 60% or 70%. All I know, is the bottom 50% are paying zero. So, John, I hope that answers the question. I’m sorry it took 25 minutes here, folks, but that’s my hearing and not him. That was a great example. That’s the kind of… That’s why I do not do TV ’cause that’s what people sound like on an IFB. That’s why I don’t use the phone, because that’s what cell phone calls sound like to me. And I caught maybe one out of every eight words he uttered. It just sounded like the wind was blowing through everything he said. I think it was on mic, then off mic.