Tax Rates Aren’t Getting Any Lower

RUSH: I don’t want to scare you people, but as I listen to the Democrats, I can’t help but thinking, ladies and gentlemen, that we may be living in a period of time where our tax rates are as low as they are ever going to be. With no real Social Security reform planned and with the only medicine that we appear to be offered for Social Security reform is more taxes, and with the Democrats bellyaching and whining and moaning about “deficits as far as the eye can see,” the only thing that’s keeping us, the only obstacle to massively high taxes is George W. Bush, and he’s out in two years. If the Democrats win the White House, then all bets are off on tax increases. It’s almost a foregone conclusion, and to that end..
Really, I don’t mean to scare you. I continue to marvel at this last election in November. Here with the stem cell debate, there they go right ahead with it, the judges and all these things that were supposedly so important never even made it into the campaign, and now I have a theory that many of the people who ended up voting for Democrats without any concern for policy, just because they were mad over certain things Republicans have or haven’t done are going to wake up one day and beat themselves on the side of the head and say, “What happened? How did this happen?” They’re not going to know that they are the culprits for empowering these people. By the way, another see I told you — actually, this was Thomas Sowell‘s. Have you seen any of these moderate Democrats in positions of power, the ones, these conservative Democrats in the House that secured Nancy Pelosi her speakership? Have you seen any of these people? They’re nowhere to be found. Who is it running this party?
Ted Kennedy, Nancy Pelosi, Jack Murtha. It’s the same old usual suspects. They are the old war horses, the old liberals, and they are running this party. The idea that moderates swung this election, that may be the case, but I remain to be convinced that moderates voted the way they did because they want full-fledged liberalism back in charge running the country. I just refuse to believe it. There’s no poll ever that indicates that or has indicated that. That’s not going to stop the Democrats. Polls only matter when they are beneficial to them. But to illustrate what a real hero Ronald Reagan was, I have posted a link at RushLimbaugh.com to the National Taxpayers Union and the National Taxpayers Union Foundation. What this is is a table, and it’s very easily read. I can’t go through the whole thing here because it’s number after number after number, but when you get a chance, you ought to visit RushLimbaugh.com. We posted this before the show so you can get up there and see it now, and it’s a history of federal individual income, bottom and top bracket rates.

There’s Kennedy right now with his prequel at the National Press Club in Washington. We’re rolling on this, but what is he going to say that we haven’t heard before? So we’re not going to JIP this. This is not the Ted Kennedy show. It’s not going to become the Ted Kennedy show, but Cookie is rolling on it. Anything noteworthy we’ll have for you as excerpts later on in the program. I’ve been blue in the face telling people: In 1980 when Ronald Reagan took office, the top marginal tax rate was 70%. The bottom tax rate was 14%. In 1989 when Ronald Reagan left office, the top marginal tax rate was 28%. So it had fallen from 70 to 28%, and the bottom tax rate was 15%. That went up only 1% over the course of the Reagan presidency, and then if you go to 1991 through 1992 the rates were 31% at the top. They bumped three points and 15%. Then you go to ’93 and Clinton, and here we go.
The top rate from 28 to 39.6, and it stayed that way all the way through 2000. Of course the top rate’s now 35. Where this chart ends is at 2000, but you’ll see that the ceiling on these top rates changed dramatically. In 1980, the top marginal tax rate of 70% was paid on income over $212,000. When Reagan left office, the top marginal tax rate of 28% was paid on an income of anything $30,950 or over. What’s interesting is to look at tax rates starting at 1913, for example. From 1913 to 1915, the top tax rate was 7% on income over half a million a year. The bottom bracket was 1% of taxable income up to $20,000. Let’s see, 1913 at 7%. By 1916 the top rate’s 15%. By 1917 the top rate’s 67%. At 1918, it’s 77%. It stays that way through 1921, then it falls to 56%, then to 46% in ’24, back up to 79% from 1936 through ’39, and on and on.
In 1944 and ’45, the top marginal tax rate was like 94% in this country on income over $200,000 a year. From ’46 to ’49 it fell from 86 to 82, then back up to 91% through 1963, when John Kennedy proposed his massive tax cut program. The top rate in 1963 of 91% fell to 77%, then to 70% through 1967. Kennedy leaves office, and it jumps back to 75, to 77, then down to 71 and 70 — and Reagan comes along, and it goes to 50 and then 28, and then you’ve got Clinton back in, jumps to 39.6%. Bush comes in, goes down to 35. This just spells this out. It illustrates it, and you can print this out and have it hand. Ronald Reagan was truly a hero — and, by the way, I want to point out to you that during those eight years when the top marginal rate fell from 70% to 20%, the bottom rate (just so you know, there are a whole bunch of rates here, but they calculate just the bottom rate and the top rate), throughout the Reagan years, the bottom rate actually fell from 14 to 11, and then with tax reform in ’86, by ’88 had gone back up to 15%.
So every rate full during the Reagan years then held steady, and the income over which that income was paid increased as well because they factor in inflation and so forth. It really is a fascinating illustration of just what a hero Reagan was — and during those eight years, when that top marginal rate fell from 70 to 28, revenue to the treasury doubled, and during this period of time, the Democrats were talking just like they’re talking now, “Deficits as far as the eye can see!” The deficit was portrayed as a monster. It was horrible. Everybody from Sam Donaldson to Tom Brokaw to Walter Cronkite said, “We are running up the bill paying for a party our grandchildren are going to have to pay,” and so forth and so on. Then we had a balanced budget in 1994 with congressional — or ’95, I think it was — when the congressional Republicans took over the House of Representatives, but of course as we all know, the eighties was a boom time. It was a boom economy; the bottom didn’t fall out.
The country didn’t go into recession with these dramatic tax cuts because revenue increased, just like revenue has increased with the Bush tax cuts, particularly the reduction of capital gains to 15%. People report income all day long at 15% and they’ll go out and try to earn it, but nobody is going to try to earn income when the tax rate on it is 70 or 77%! It’s not worth the trouble. It just isn’t worth the trouble. You tax yourself out of revenue. Lowering the rates made people more inclined to go ahead and report those dollars earned because 50% is paying a lot less than if you have to pay 77; 28 is a lot less than 50. In ten years — stop and think of this, folks — from 70% in 1980, and actually it was 70% from ’71 through ’80, and in ten years it goes down to 28, and look at what happened to all the revenue that started pouring into Washington, and this the Democrats cannot afford for people to actually believe. I mention all this because I really do think that we’re living in an era, potentially, where our tax rates are as low as they are going to be for the rest of our lives, particularly if the Democrats do win the White House in 2008.