RUSH: Judy in Silex, Missouri, nice to have you on the EIB Network.
CALLER: Yes, Rush, thanks for taking my call.
RUSH: You bet.
CALLER: I am the ultimate conservative, as are all my children.
RUSH: Thank you.
CALLER: I have four of them. I wanted to talk about taxing the rich. It may be worse than you even imagine. Since you have no children, you may not be aware that, after you earn a certain amount, you can no longer claim your dependents.
RUSH: I’m aware of it.
CALLER: I have a son who started his own business; he’s been very successful. I don’t know exactly how much he makes, but he says he pays hundreds of thousands of dollars in taxes. He has four children and a wife with an incurable disease, yet he’s not even allowed to claim any of them as dependents.
RUSH: Once you pass a certain income threshold, it’s the same thing with a lot of other deductions as well, charitable deductions, the percentage you’re allowed to take, interest deductions. For example, nobody’s going to have any sympathy for this, which is why nobody talks about it, Judy. I’ll never forget, Andy Grove, who was the CEO of Intel at the time Clinton proposed a cap of deductibility of $1 million in CEO salaries. He was on This Week with David Brinkley and he was asked about it, said ‘I don’t want to answer these social questions.’ He didn’t want to talk about these kinds of things because he knew nobody was going to have any sympathy. For example, I don’t know how much money you’re talking about here in terms of what your son earns and so forth, but —
CALLER: Well, I’ll tell you this. He made his own way, because my husband and I, who I lost about three months ago, never earned over $50,000, between the two of us.
RUSH: Right.
CALLER: And we raised four children on that. They all worked their way through college working several jobs.
RUSH: Well, you’re from Missouri. I totally understand that.
CALLER: Yes.
RUSH: But just to give you an example, and this is not a personal example of mine, I’m just going to give you an example from the tax code. I don’t expect anybody to be sympathetic to it. I just want to tell you about it to inform you. If you happen to have enough money to want to go out and buy, say a $5 million house, and let’s say you put down a million and you borrow four, you can only deduct $1 million on your mortgage. Once you reach — maybe a little higher — you’re only allowed to deduct a million dollars, not the whole mortgage, the interest on what you’re paying. So if you put down a million to buy something that cost five, and you’re therefore paying off four million, you can only get a so-called tax deduction on one million of it. Charitable donations, it’s a sliding scale. The max you get is 50% and it slides down after that. So, no, things are not well known because there aren’t a whole lot of people in these brackets at this kind of income paying this, but I’ll bet you the income threshold for your son to lose the standard deduction and exemption for his children, his dependents, is not really that much, right?
CALLER: No. I think it’s around a million dollars.
RUSH: Gross?
CALLER: Yes.
RUSH: That means actually something like, just on federal, that he’s looking at something like 64 net, something like that, $640,000 net, and then the state taxes and all the other taxes, property tax and so forth. So that million gross is probably just a little over a half million, and he can’t claim his four kids as dependents.
CALLER: Well, like I said, he’s got a wife with an incurable disease.
RUSH: Right.
CALLER: A lot of medical bills, and, you know, he can look forward to no help at all, you know, no loans, no grants for his kids to go to college or anything.
RUSH: Look, I appreciate your calling and telling me this. I want to draw a distinction here. I’ll make an assumption. Judy here is not crying over spilt milk. This is money that her son is earning. So much of it is already being taxed, but because he earns gross X-amount, he doesn’t get the deductions for the dependents, his kids, and so forth. Nobody’s asking — this is not fair, we need to make this right, not a charity case here. This is a clear example of how somebody who’s earning it is having it taken away by government, who, at the same time, is saying he’s got more than he needs, and he needs to even be paying higher taxes, and because his tax cuts have been granted to him since Bush enacted them, that poor people are staying poor. So your son, while being savaged by the US tax code, at the same time is being blamed for not paying enough, for getting unfair tax breaks, and for denying others who have less a chance to earn more. So people like your son are enemies, class envy. There are people in the country who look at people like your son without knowing the specifics and think, ‘This guy needs to be got even with, it’s not fair,’ and so when people are talking about raising taxes on people like your son, they’re all for it.