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RUSH: Nearly half of US households escape the federal income tax. ‘About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center.’ By the way, this bunch, they’re an outgrowth of the Urban Institute and the Brookings Institution. They are a far left bunch. This is not some middle of the road think tank reporting this. This is a far left group, and they’re happy about it. ‘Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it’s still almost always better to file,’ the AP suggests here. ‘That’s the only way to get a refund of all the income taxes withheld by employers. In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009.’

I have news for you. If you earn $60,000 a year, you are in the upper 10% of wage earners in this country. Fifty thousand and a family of four, you effectively pay no income tax. The earned income tax credit, all the child exemptions, and in some states you don’t even have to have a child to get the child exemption, you just have to know one. I’m not making it up. Or you have to visit one. In fact, in some states, I forget which state it is, read so much about this today, one state gives you an earned income tax credit or some child tax credit if you’re a father who no longer lives with the kid, but you still get credit for it. Now, that’s going to promote family togetherness, right? The deadbeat dad qualifies for a child tax credit in certain states. ”We have 50 percent of people who are getting something for nothing,’ said Curtis Dubay, senior tax policy analyst at the Heritage Foundation. The vast majority of people who escape federal income taxes still pay other taxes, including federal payroll taxes that fund Social Security and Medicare, and excise taxes on gasoline –‘ oh, okay, so we’re supposed to feel better ’cause they at least are paying other taxes.

‘That helps explain the country’s aversion to taxes, said Clint Stretch, a tax policy expert Deloitte Tax. He said many people simply look at the difference between their gross pay and their take-home pay and blame the government for the disparity.’ Well, yeah! Who else is responsible for it? ”It’s not uncommon for people to think that their Social Security taxes, their 401(k) contributions, their share of employer health premiums, all of that stuff in their mind gets lumped into income taxes,’ Stretch said. The federal income tax is the government’s largest source of revenue, raising more than $900 billion — or a little less than half of all government receipts — in the budget year that ended last Sept. 30.’ Wow. That’s incredible. It was almost that much at the end of the eighties when Reagan lowered tax rates, almost exactly that much. I don’t think all of that $900 billion was income tax revenue, but it was close. So anyway, there’s the sad details of all this: jobless numbers up, 1.2 million people homeless, 47% paying no income tax. What recovery? Where is the laser-like focus on jobs? It doesn’t exist. He’s either incompetent or doing it on purpose. It doesn’t matter which at this point. What matters is that the policies of this regime be stopped and reversed.

To the phones we go. Jacksonville, Florida. Steve, nice to have you on the program, sir, and welcome.

CALLER: Thank you, Rush. Good to talk to you.

RUSH: You bet.

CALLER: I got an idea here. First of all let me say I’m a very conservative person and I believe that the government should spend no more than they take in.

RUSH: Right.

CALLER: But with the national debt and the way it’s still growing —

RUSH: Yeah.

CALLER: — and the inability of Obama and the Democrats to try to reduce it at all, I’m getting more interested in this value-added tax, but I think that two things need to happen. One is that the value-added tax, a hundred percent of what’s collected be dedicated to reducing the national debt.

RUSH: Won’t happen.

CALLER: Well, I know but needs to have some controls on it.

RUSH: Won’t happen.

CALLER: And it would be effective for a specified period of time, say five years or ten years.

RUSH: Won’t happen.

CALLER: And then once the debt’s reduced it goes away.

RUSH: Well, that won’t happen, either.

CALLER: Yeah, I know.

RUSH: The debt won’t be reduced. Yesterday I had a story from this same outfit that put out the story on 47% of the population not paying income tax, the Tax Policy Center, and they had their geeks do all kinds of research, and they found that there is no level of taxation within our current tax structure that would come anywhere close to reducing the debt. Even they admit that the only way to reduce the debt is to stop spending money we don’t have. We cannot tax ourselves into prosperity, and we cannot tax ourselves outta debt. Do either of those make any sense? The more money you take out of the private sector, the slower the economy, the less revenue is generated, the fewer taxpayers there are. It doesn’t make any sense at all. None of this that’s being done makes any sense. In countries in Europe where they’ve had the VAT, the VAT rate keeps rising, federal spending, government spending keeps rising.

The number two job of any elected official is spending money. The first job is to get reelected. So the VAT tax, it might work, if they stop the income tax. If they replace the income tax with the VAT tax, I mean that’s a fair rate, everybody pays the same rate, somewhat elective because it’s a consumption-based tax. You get credits for — well, you don’t, the consumer, but people along the supply line, from manufacturer to retail sale, they get a credit for the tax in the previous step of the way, at least in some countries. It depends on how they would set this up. But I mean if they replace the federal income tax with it, get rid of the tax code, then maybe, much fairer, much simpler, you wouldn’t even need to file a tax form. That will never happen, because the tax code is the single greatest power for social architecture that US Congress members have.


RUSH: I just got an e-mail from somebody who says, ‘You blew it on the VAT tax. The Democrats are going to make a commercial out of what you said praising it.’ Did I not make it clear that if we got rid of the income tax, the VAT tax wouldn’t be a bad idea? Did I not make that clear? I know that they parse me and take me out of context all over the place, but let them try, after that opening monologue, let them try and suggest to anybody that I support the VAT tax or any other tax increase. That’s not gonna fly with anybody.

This is Eric in Clarks Summit, Pennsylvania. Great to have you on the EIB Network.

CALLER: Hey there, Rush. I’m calling with a little bit of a crisis of conscience right now.

RUSH: Oh, no.

CALLER: As I was explaining to Mr. Snerdley, I did my taxes actually early this year in February, and looking at the withholding, the federal government withheld $900 roughly in taxes. We received a refund for $2,300. So we’re part of that crew that now pays no federal income tax. We have no federal income tax liability.

RUSH: Wait a second.


RUSH: For the whole year you had $900 withheld?

CALLER: Yes, sir.

RUSH: And you got a refund of $2,300?

CALLER: Yes, sir.

RUSH: Did you apply for any credits to get this refund or did it just happen?

CALLER: Well, I did it on one of these free online services that the IRS steers you to, and I answered every question truthfully, which you have to do. I don’t itemize because we have no deductions to speak of. We own our home, and so I truthfully answered every question posed to me on the 1040-A form and at the end it told me I’m getting back $2,300.

RUSH: Holy smokes, what a deal.

CALLER: Now, I was born and raised in New York to European American parents, you know, second generation with a certain work ethic and this is my crisis of conscience. After moving to Pennsylvania, my wife and I, until we got situated, we were paying privately for medical insurance, and it was about $400 a month.

RUSH: Yeah.

CALLER: Now, at that point we were living off the proceeds of our home sale in New York.

RUSH: Yeah, yeah.

CALLER: Within a month of moving here, Blue Cross raised their rates another hundred dollars, and I called, and I said, ‘Look, you gotta do something here. We’re depleting our savings.’ So we found a plan that’s based on your income, and at that point it was nothing. We had no money coming in at that moment. My wife is a nurse, so we knew she’d find something immediately. But in the meantime, we took this policy, and we were paying for ourselves and our daughter privately, with no help, we were able to manage the premium they gave us. Within a few weeks of accepting that plan, CHIP contacted me, solicited me and said, ‘Hey, I see you’re paying for your daughter yourself. You don’t have to. We’ll do it for you, and we’ll give you a lot better coverage than you have now.’

RUSH: Wait a minute. By CHIP you mean the Children’s Health Insurance Program in Pennsylvania?

CALLER: Yeah. They solicited us and said the plan we have is minimal, it’s for catastrophic, you know, it’s very minimal coverage, no prescriptions, no eyeglasses, nothing, and then CHIP called us and said, ‘Why are you paying for it yourself? You’re eligible based on your income for CHIP.’ So, you know, only a fool would say, ‘I’ll keep the crappier coverage for my daughter.’

RUSH: You just have one kid?

CALLER: Just one daughter.

RUSH: Now, it can’t be earned income credits — (crosstalk)

CALLER: My wife works. So we had a child credit, we had an earned income credit, I have just burned through my first extension of unemployment, I am now working on my second extension of unemployment.

RUSH: Oh, so you’re outta work now?


RUSH: Well, what did you earn, if you don’t mind my asking?

CALLER: We made, I think, $33,000 last year.

RUSH: Well, this fits, then.

CALLER: Just to give you a little bit of background, we left New York at the height of the real estate market and made a good chunk of change on our home. So we moved here and were mortgage free by the time we were 42. So we own our home outright, so we’re able to live on my wife’s salary as a nurse. And she works part time, we’re able to enjoy our home to raise our child without the help of day care or anything like that, but she’s getting older now, and she needs us less, so when I think about reentering the workforce, I look at what I would have to make in order to, you know, pay for health insurance —

RUSH: Yeah.

CALLER: — and quite honestly, Rush, to make it worth my while to get off my ass, and now I’ve got the federal government sending me this huge refund that I did absolutely nothing to earn.

RUSH: So what are you going to do with it? I got 30 seconds, how you going to resolve your crisis of conscience?

CALLER: You know what, that’s why I was calling you. I was hoping you’d have something for me.

RUSH: Well, I’ll take it!

CALLER: (laughing)

RUSH: I never get any money back from the SOBs.

CALLER: Well, I joke with my friends that do pay taxes and I say, ‘Thanks so much for contributing to the Let-Eric-Stay-Home fund.’

RUSH: You fit the statistic.

CALLER: But I’m disgusted by this.

RUSH: Well, I understand how you feel. So are the rest of us who are paying it to you.

CALLER: Right, and if you saw pictures of my home you would be further incensed because I have a beautiful home.

RUSH: Well, I think you ought to continue to feel guilty as I am mad.


RUSH: Now, that call from Eric in Clarks Summit, Pennsylvania, a teachable moment, very illustrative. You know that this regime is trying to create a permanent underclass. That’s how you do it. The guy made under 39 grand, that’s one of the target levels, his total income was 30, paid $900 in taxes, got $2,300 back. You have to make being poor comfortable. You have to make it comfortable and that’s what this is attempting to do. This is how you create a permanent underclass, folks. All of this is by design.


RUSH: Let me ask you this question, folks. What’s going to happen when that 47% who are not paying any income taxes becomes 50%, which is certain to happen during the Obama regime? All you have to know about that is that a family of four making $88,000 a year gets their health care insurance subsidized with the new health insurance bill, 88 grand, a family of four will have their health insurance subsidized by everybody who makes more than $88,000 a year. April 15th is no longer going to be tax day. It’s going to become Christmas Day to the 50% of the people who don’t pay income taxes who are going to soon realize, if they don’t already realize it, that tax increases will lead to a better lifestyle for them. So this is how you do it, this is how you create a permanent underclass. We had a call, if you’re just joining us, a guy from Pennsylvania made $30,000 last year, had $900 in taxes withheld, his income tax refund is $2,300 because of all of the earned income tax credits and child tax credits and so forth that he qualified for using IRS rules. And he said he had a crisis of conscience, didn’t know what to do with this because he thinks the system sucks. But it’s tough to give the money back.

My grandfather, his whole life, tried to give his Social Security check back and they wouldn’t take it. So he gave it to charity. Created an account, just put the checks in there every month, let it build up and gave the money to charity at some point. But regardless, you have to make being poor comfortable, and this is how you do it. Eighty-eight grand a year, which is not poor, your health insurance is subsidized under this regime’s health care plan. Fifty thousand a year and less you pay no income tax. Gotta make it comfortable, though, so people will just be satisfied enough to stay there, and then hopefully, if you are the one designing the permanent underclass, you want them to quickly learn that their well-being depends on future tax increases.

Now, the super rich, they’re protected by their friends in Congress. The people that are rich with no income. You ever wonder why all these rich Democrats always support tax increases? ‘Cause they don’t pay them, either, because they don’t have earned income. I’m talking about the super rich who inherited a bunch of money or worked for a lot of money and then retired and have that nest egg of gazillions of dollars and it earns investment income. They are gonna get taxed now with Medicare on that, 3.8% for the first time, but they take care of their rich buddies, they take care of themselves, and they’re taking care of the non-producers.


RUSH: Therese in Littleton, Colorado, I’m glad you called. You’re on the EIB Network. Hello.

CALLER: Thank you, Rush. I am furious. I’ve been trying to get on your program for years, since 1993 I’ve been listening to you, I’d love to tell you how much I love you and how much you’ve inspired me and changed my life, but I don’t have time because I’m furious with that gentleman that called. I am so tired of people looking and saying, ‘Oh, I’m guilty, but then doing nothing about it.’ You know what, it’s about time the people get off the dole when they don’t need to be on it because they’re going to the government, and knowing that they’re going to their neighbors to get a handout versus just getting off their butts and working. And, you know what? I’m just furious. My husband and I have made less than $15,000 — well, less than $20,000 the past two years in a row because we’ve worked our asses off up to that point to get him through a doctorate program. We opened up our own business this year, we’re being hit by this insurance thing, too, because we’re an upper cervical spinal clinic and we’re cash only, because we refuse to be dictated to by insurance companies and by the government, it is hard work to be a business owner, it is hard work to go out and make it on your own.

But I refuse to do it any other way. I look to my family for the support that they’ve given me, I look to you to empower us to be able to say, ‘Yeah, we can do this if we work hard.’ And I’m just furious at being in my early thirties and being hit (unintelligible) our nation. What has happened? You know, you said two days ago, I think it was, or three days ago you asked about what we think about the generation around us, and I have to say, the people that we associate with, our friends, are very intelligent people, and they work hard and most of them are business owners and we can really commiserate with one another right now. And it’s just infuriating, what is happening. I was going to call you and I was going to say, you know what, we’re a really awesome generation, and then I hear that phone call from that gentleman who is so happy to go to the government to get assistance.

RUSH: No, no, now, wait. He was not happy. He said he had a crisis of conscience because he didn’t like it at all, he didn’t know what to do with it.

CALLER: Then stop. Why do you need to listen to somebody else to clear your conscience?

RUSH: No, no, wait, wait, hold a second. It’s more insidious than that. He didn’t try to get this. He went to the IRS website, he filled out his tax form as they directed, put in all the numbers that they said he needed to put in and he was shocked to get his $2,300 refund check when his total tax liability was only $900. The government arranges it. This is how you go about creating a permanent underclass. Your anger should not be at this guy. Now, there are some people out there who are gaming the system this way, and your anger at them is justified. Your real anger ought to be at the regime.

CALLER: It is. Believe me, it is. I’m just tired of it all. I look to the future and there’s a part of me that just doesn’t know what to do, and then at the same time, I know that there are intelligent, strong, self-motivated people that would never, never go do that, and those are the people that are being demonized like you’ve had so many times, by the media.

RUSH: Damn right.

CALLER: I just can’t believe it. There are days that I just shake my head, I think, how is this happening?

RUSH: Look at what they’re doing to this mine owner up in West Virginia. They are trying to criminalize this guy, not because of his violations, but because he donated to a legal political party, legally, the Republicans.


RUSH: This Blankenship guy, they are trying to criminalize him. Meanwhile, Rahm Emanuel can stand up at a banquet at the head table, start yelling the names of politicians and stab the table with a knife and shout ‘dead’ and nobody gives a care about that. But they’re trying to destroy this guy. They’re trying to criminalize work. They’re trying to say that you and I and everybody else like us that work, we’re the ones that are greedy. We’re the ones that need to have our taxes raised because life’s been too fair for us, and these poor people that don’t have anything — the theft that is being performed on us is called virtue and compassion.

CALLER: It’s just outrageous. And, you know, Rush, in opening this clinic that we’ve opened, the people that come to us, ’cause we’re cash only, the people that come to us are typically people that are either paying individual insurance so they get it or they want to take their health into their own hands and so they see the value. And it’s our patients that, you know, we help our patients that have insurance get reimbursement. And they’re the ones that come in and say, ‘Why aren’t you taking insurance? Why aren’t you doing this?’ And they actually tend to not see — because their employer is paying their insurance for them — they don’t see it, and so they look at it in a different way, and it’s amazing to me because I think that sense of entitlement, how do we get to people — the more that you have a sense of entitlement, you have to keep looking at who is giving you that sense of entitlement? And if you give them that right, then soon enough they’re going to dictate, and like you said, they’re gonna act like they are compassionate and they’re doing it with this whole health care thing, and you just wait, and then they’re gonna screw you because you’ve looked to them and you’ve said, ‘We want you to be the provider.’ And guess what? They’re going to screw you. It just blows my mind that people don’t see it.

RUSH: Well, now, wait, wait just a second. If you look at the polling data out there on any issue or at Pelosi, Obama, or Reid, you’ll see that a clear majority does get it. They may not get every stinking detail —

CALLER: Right.

RUSH: — but they know something’s not right, and most of them are very sophisticated in their knowledge of what’s going on here, and that is why the Democrats are going to lose bigger than they have ever lost before in November. It’s going to be the equivalent of a political bloodletting. All Obama has to do is his next agenda item and he alone keeps the agenda item up and the momentum against him up. Don’t think you’re alone out there. You really aren’t. The real question is what’s going to happen when the under 50% who pay taxes stop paying them? What’s going to happen when they shrug? That’s the question everybody should ask.

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