RUSH: Donald Trump and his tax plan and economic plan. He has released it, and here are the highlights. No tax would be assessed against individuals earning. There will be a major tax reduction, Trump says, in unveiling the plan. It will simplify the code. It will grow the economy at a level that it hasn’t seen for decades. Tax would be zero for 31 million households that now pay tax. The highest individual rate would be 25% versus the current top rate of 39.6. The number of rates would be consolidated from seven to four. The rates would be zero, 10, 20, and 25. The plan would impose 10% tax on overseas profits, and it would place immediate tax on overseas earnings. That’s a tax that can now be deferred. And then of course there is the obligatory here, the attack on the carried interest portion, the low tax rate that hedge fund people earn.
So let’s go to the Trump sound bites as he explains this. This is this morning in New York City at Trump Tower. Trump had a press conference to talk about his tax plan. We have three sound bites. Here they are.
TRUMP: We’re going to cut the individual rates from seven brackets to four. Simplification. Twenty-five percent, 20%, 10%, and zero. If you’re single and earn less than $25,000 per year, or married and jointly, and jointly earn less than $50,000. So, very important, if you’re single and earn less than 25,000 or married and jointly earn less than $50,000, you’ll not pay any income tax, nothing.
RUSH: Okay, what do you think of that? Why don’t you like it? (interruption) Right, okay. Here’s the problem with that for me. If you’re not paying any tax, it’s an incentive to stay at that earning level. How many people do we hear about now who do not want a raise or don’t even want to find a job because they will then no longer qualify for welfare? All right, that’s the first bite. Here’s the next one. This is the bite where he calls for the elimination for the Alternative Minimum Tax, the death tax and the hated carried interest exemption.
TRUMP: This eliminates very strongly and quickly the marriage penalty, very unfair penalty. It eliminates the AMT, which is the Alternative Minimum Tax. It ends the death tax. It’s a double taxation. A lot of families go through hell over the death tax. It reduces or eliminates most of the deductions and loopholes available to special interests and to the very rich. In other words, it’s gonna cost me a fortune. It ends the current tax treatment of carried interest. Those are the hedge fund folks that I’ve been talking about for quite a while and make a lot of money, carried interest.
RUSH: Gotta take a break. I’ll explain that again to you when we get back.
RUSH: One final Donald Trump sound bite and we’ll come here back from the break at the top of the hour and start opening phones on Trump’s tax plan, his economic plan — how you receive it, what you think of it — and some of the other news on the Republican presidential campaign. The final Trump sound bite… Well, first let me explain. “Carried interest” is the rate of taxation that hedge fund operators pay. I don’t know the history of it.
I’m assuming that they have so much power because they have so much money that they have been able to craft a special section of the tax code for their type of business. Carried interest implies that their profits are not immediate, that their profits are deferred and taken over the passage of time. And because of that they have secured a lesser tax rate. Now, I don’t know what the reason is. That’s just an educated guess.
But the fact is that hedge fund operators do not pay the 39.6% rate, because their income is not categorized as ordinary earned income. It’s called carried interest. And again, these economic people come up with their own lexicon purposely to keep people in the dark, to where you need a translation app to understand what they’re talking about. And this is what Trump says that he is going to change, because he doesn’t think that there are this many uber-wealthy people that need to get this kind of a tax break.
And I’ve had a lot of people send me an e-mail saying, “Rush, this is dangerous! This sounds exactly like Obama’s tactic. This sounds exactly like what the liberals propose: ‘Taxing the rich.'” You know, I can take you back, if you want, to the 1980s and Ronald Reagan saying the same thing about the super rich. In fact, I’ll do that in the next segment. Here’s the final Trump bite, though. This is the ripping of Obama building a soccer field for Club Gitmo terrorists. Listen to this.
TRUMP: I have a habit: When you get a bill, you call up and you negotiate. To me, that’s a compliment. I want to take that thinking to the White House. I would bet you we could save 20% of our budget. We just spent a million dollars building a soccer field, okay? A soccer field for our prisoners that happen to be in Guantanamo. Okay? I don’t like that. “Why are they playing soccer?” is my question.
RUSH: “Why are they playing soccer?” But he also went on, flat piece of land! We didn’t even have to excavate. Why do we spend a million dollars to build a soccer field for terrorist prisoners at Club Gitmo?
RUSH: I check the e-mail during the break, as you know. Now, folks, contrary to what is thought to be the case out there, I haven’t signed on to the Trump campaign. Not a Trump guy. Everybody’s assuming that I’m a Trump supporter. But you know why they assume that? It’s not because of anything I’ve said. It’s because I’m not a Trump hater. And that’s the better description. I don’t hate Trump. I’m not worried about Trump. I’m not alarmed about what Trump is doing. And a lot of people have said, “You know, if you were consistent you would be opposing Trump the way you opposed Perot back in 1992,” and, you know, I’ve pondered that.
I pride myself on being consistent when it comes to ideology and politics, and I’m not a phony baloney, plastic banana, good-time rock ‘n’ roller and I don’t change what I believe with the wind, and I don’t tell people I believe things I don’t believe and vice-versa. I can honestly tell you that the Trump candidacy has in no way looked to me similar to the Perot candidacy. I’ll tell you why. My instincts, back in 1992 when the Perot phenomenon began, told me, and they were eventually born out, that Perot was not in this race, or in that race to win it, that there was something else going on.
And even when he launched his campaign and even when he was out showing up in debates and campaigns, there was something that told me he still wasn’t serious about winning. But instead I really did have the impression that he was attempting to — I don’t want to say sabotage — I thought there was a vendetta. I thought he had something going on with George H. W. Bush. It turned out that there was something there, and it involved the Reagan administration and supposedly missing and then discovered, prisoners of war in Vietnam. But the Trump candidacy, I’ve never thought that Trump wasn’t serious once he got into it.
Now, I’m one of the people that didn’t think he would actually pull the trigger and run, but when people tell me now can he win or is he serious, I always say, I think he’s serious. He may drop out at some point, but to me the two things are just different. And a lot of people, “You opposed Perot, and you have the same reasons for opposing Trump, but you’re not opposing Trump.” By the way, things are a lot different today than they were then, too. Vastly different.
But, anyway, that’s the best answer I can give you. I even predicted back then that Perot would not finish the race. I predicted that he would get out if it began to look like he was going to win, and he did, if you recall. And then he came back in later, a second time. Remember when he got out he said that it was because he had discovered that people were planning on hijacking or sabotaging his daughter’s wedding? I forget the specific details. Anyway, that’s just to answer these numerous e-mail inquiries.
But the point is here, people do fall in certain camps, and I think there are Trump haters out there, particularly on the Republican side. I’m not one of those. And because I’m not a Trump hater, some are assuming, well, then I must be a Trump guy. I’m a nobody guy right now. And look, I’ve explained why I have this policy or philosophy during primaries. I’ll explain it one more time, especially for a primary policy or campaign this long, folks, I do not have anything to say about any of these campaigns. I don’t know where these guys are gonna go. Carly Fiorina, I don’t know what they’re gonna say from day to day. I have no idea how they’re gonna change, if they’re not gonna change. I don’t know what’s gonna happen to them. I just do not feel confident hitching my wagon this far out.
Now, many people say, “But you could make the difference if you would.” Maybe. I don’t believe that. I think too many forces are at work out there for any one individual to determine the outcome of something like this. I want to be here next year and the year after that and whatever years continuing that I want to do this. I want to be here, and I don’t want my credibility compromised in the process. And my attitude has always been that politicians come and go, they win and lose. It’s the name of their game. It’s the nature of their game. So I just sit back and observe.
I think the primary process is ideal for winnowing out those who can do it and those who can’t, and this primary process is proving most fascinating in ways nobody would have predicted. And I think there’s even a bigger surprise than Trump right now, and that’s Ben Carson, in terms of the establishment and pretty much anybody else. If you would have told people that Ben Carson would be a factor six months ago, I don’t think anybody would have taken you seriously. And if you would have then further said that Ben Carson’s gonna be very close to the lead and that the establishment chosen candidates are gonna be so low that you need a microscope to see ’em, that would have been tough to believe, too.
So I sit back and observe these things and comment on them as they go, which is exactly what I’ve been doing here. And because I have not expressed disgust for or anger at or fear of Trump, people are assuming that I’m a Trump guy. But let’s move from that on to this talk about his plan, which I have here, I haven’t had a chance, it came in after the program started and have not had a chance to delve into it. But a lot of people are getting on his case for sounding a lot like Democrats. I’ve had some e-mail from people. “Oh, my God, I just saw the Trump tax plan! Rush, it looks just like Obama’s. It looks like just like Clinton’s. It’s a tax-the-rich tax plan.” And I don’t think that’s the case.
Now, again it’s limited how much detail I’ve been able to absorb here, but what I’ve been able to see of it so far, I don’t think he’s talking about the rich as the left talks about the rich. When the left talk about the rich, they mean anybody — well, in 1996 the rich was anybody $50,000 or above. Today it’s not much more than that, and that’s not who Trump’s talking about. Trump is talking about the 1% of the 1%. He’s talking about some of these really highfalutin, he calls ’em the hedge fund guys, who aren’t effectively paying nothing.
Now, I went back, I mentioned to you that you can find, in the 1980s, you can find evidence of Ronald Reagan with similar tax proposals to what I have seen of the Trumpster’s. If you go back to May of 1985, after the first Reagan tax cuts, he proposed even more tax reform. He made a speech, and in the speech announcing his new proposals, which included slashing taxes for families, as Trump has done today, in that same speech Reagan said the following: “Under our new tax proposal the oil and gas industry will be asked to pick up a larger share of the national tax burden. The old oil depletion allowance will be dropped from the tax code except for wells producing less than 10 barrels a day. By eliminating this special preference, weÂ’ll go a long way toward ensuring that those that earn their wealth in the oil industry will be subject to the same taxes as the rest of us.
“This is only fair. To continue our drive for energy independence, the current treatment of the costs of exploring and drilling for new oil will be maintained. We’re determined to cut back on special preferences that have too long favored some industries at the expense of others. We would repeal the investment tax credit and reform the depreciation system. Incentives for research and experimentation, however, would be preserved. There is one group of losers in our tax plan,” Reagan said in May of 1985. “– those individuals and corporations who are not paying their fair share or, for that matter, any share. These abuses cannot be tolerated. From now on, they shall pay a minimum tax. The free rides are over.”
Now, some of this may come as a surprise to some of you because the impression of Reagan and taxes is that it was slash, slash, slash, cut, cut, cut, and of course by the time the left gets through with what Reagan did, the rich weren’t paying anything. I don’t know how many of you, because that has been part of the left’s history revisionism since the 1980s, I don’t know how many of you think that Reagan got rid of taxes on the rich. But it’s just the exact opposite, folks. The rich ended up paying more after Reagan’s tax reform. And the way it was made to happen was not by raising their rates, it was by lowering their rates and getting rid of all these silly brackets where income could be sheltered for crazy, wacko investments. Deductions, they were called.
The top marginal rate was 90% when he took office, maybe was 70% when he took office, 70 or 90. We did have a 90% tax rate at some point. Maybe 70 when he took office. And when he left office, it was down 28%. So what happened is that it became much easier and attractive for the wealthy to declare their income and only pay 28 cents of every dollar rather than go through a much complicated procedure to try to avoid a 90% bracket that was paid on of course the last dollars people earned. How else do you explain, after Reagan’s tax cuts, this has always been the story I’ve tried to use to explain tax cuts generating revenue.
In 1981 Reagan takes office, top marginal rate 70%. The amount of revenue collected via the tax code is about a half a trillion dollars. Eight years Reagan leaves. The top rate’s down to 28% from 70, and the amount of money collected from the tax code’s almost doubled to 900 some odd billion dollars by reducing the rates. When they tell Democrats about this, the Democrats, “Well, that doesn’t matter to me. It’s not fair that the rich only pay 28%, it’s not fair, we need a higher rate on ’em.” It’s not about the revenue to them. It’s about punishment.
So when I look at Trump’s tax proposal here — and again, it’s a cursory glance — it doesn’t look like a left-wing tax plan to me. It looks like and sounds like, in fact, like maybe some people that helped Reagan put his together are working for Trump. It’s that close. You know, oil and gas has been replaced by the carried interest hedge fund guy. But clearly there are people today, as there were then, who weren’t paying any tax. Reagan made sure that that was ended.
Contrary to what people have been told that Reagan cut taxes for the rich, it’s just the exact opposite. He might have cut rates or implemented low rates on income that was not taxed at all, but the rich ended up paying more — and they still are, by the way. You’ve seen the numbers on this: 50% of all taxes are paid by the top 2% wage earners. It’s really kind of out of balance now. But my point is that no one, despite all of this, cut taxes of every kind more than Ronald Reagan did. Individual tax rates, corporate tax rates.
Nobody cut taxes more or better than Reagan did. Yet in order to flatten tax rates and increase deductions of certain kinds — which was intended to spur growth and assist families — he insisted on closing some loopholes in exchange for lowering the rates. Well, I’m sorry. That seems like the exactly what Trump is doing. And again, I hedge this on the basis that I just have a cursory glance at this, but Trump’s talking about four rates, and one of them is zero.
So actually there’s three brackets — 10, 20, and 30, or 5, 10, and 20, whatever it is. Yeah, the 20, 25, top marginal rate now is 39.6%. So he’s gonna cut taxes for everybody. You know, I still think this is too complicated. I’m for a fair tax or flat tax. You know, take 15% or 18% and be done with it. I know that’s never gonna happen. I know the tax code writers are never gonna give up their power. We’d have to elect a whole brand-new Congress.
But nevertheless, that’s what I favor. But let’s not sit here and pretend that Trump’s tax plan is Bernie Sanders. This is something that people that doesn’t like Trump are gonna drag out now to try to scare his supporters, to make it look like Trump’s tax plan is Obama’s or it’s Bernie Sanders’ or it’s the Clintons’ or what have you. And I just don’t think that’s the case, folks.
RUSH: And back to the phones we go. This is Ellis in St. Louis. Hi, Ellis. Great to have you with us. Hi.
CALLER: Hi, Rush. Thanks for taking my call.
RUSH: You bet.
CALLER: I’m a 25-year listener. I’m a longtime 24/7 subscriber.
RUSH: I appreciate that.
CALLER: I’m just about Trump’s or any other politician’s tax plan. When they say they’re gonna “tax the rich,” in my opinion, it’s a political misdirection. The rich have… They’re rich because they have created or have what people want. You know, and raising taxes on the rich is only gonna raise costs for consumers. It’s kind of like you talk about crony capitalism. Warren Buffett well knows it. He supports higher taxes because he knows that neither he nor his companies are actually gonna have to pay that. They will raise prices; they are a conduit to it. They’ll remit the taxes to the government. But, you know —
RUSH: Well, in Warren Buffett’s case, that’s right. But that’s not why he proposes higher taxes. He does it for strictly personal PR reasons.
CALLER: That may be. But in general larger companies, I think, have less objection to higher taxes ’cause they have a greater ability to pass the taxes along.
RUSH: Well —
CALLER: Small businesses have less —
RUSH: Hold it. You can’t just say… I understand the economic theory that businesses don’t pay taxes; they pass along the taxes to customers. However, in a competitive environment like we have now, with a slow economy, sometimes raising prices is not the best thing you can do. Raising prices can sometimes do great damage to your bottom line. So it’s not automatic or axiomatic that you can get away with passing on increased costs or taxes in the form of prices for your product. But that’s not really what you’re addressing. You’re saying you don’t like Trump talking about taxing the rich because you think it’s pandering. My guess is, you think it’s just… He’s trying to do the same thing that other politicians do by telling them they’re gonna be better off because he’s gonna go get the rich.
RUSH: And you just wish he wouldn’t do that. He’s different, and you wish he wouldn’t talk about the rich the way every other politician does.
CALLER: I think it’s just disingenuous. I don’t —
RUSH: Well, presidents in a sense… I don’t know about disingenuous, but it’s an automatic political win-win. The rich are never gonna defend themselves. The rich are never gonna come out and bellyache about anybody saying their taxes ought to go up. They’re gonna shut up about it and deal with it and realize that it isn’t gonna happen. (chuckles). But they’re not gonna complain about it. It is a way of… I don’t know.
“Pandering” may not be the best word, but it’s a way of trying to let the little guy know you’re on his side, that you’re gonna go out and get the rich. It is a Democrat tactic. But don’t forget Reagan used it, too. That was my point in the previous segment that Reagan based his taxation of these entities based on the basis they weren’t paying anything or very little, and that everybody needs skin in the game. But Reagan’s tax cut approach was always aimed at economic growth.
It was aimed at prosperity.
It was aimed philosophically.
It’s your money. The presumption that all money is governments and what you end up with is what they decide to let you keep? That’s what Reagan attacked, that whole line of thinking. It’s your money and what government gets — however much or little it is — it’s up to government to live within that means and not act like every dollar on the planet is theirs. Anyway, I understand that you’re looking for Trump to be different, and when you heard him go after the rich on taxes, you thought you were hearing just another politician, and that’s what you don’t want to hear from Donald Trump.