RUSH: Now, the Republican tax plan. The Republican leadership gathered in the Capitol today, and they had their big press conference and their rollout of the tax plan. And the highlights of the tax plan are thus. They’re gonna change the rates. We’re gonna go from — one, two, three, four — five rates to three rates, essentially. And it looks like the 39.6 rate that currently exists for the top 1% will stay, and it will remain the top rate, but there is a pretty significant change in the other rates.
There’s also gonna be some modification made in the home mortgage deduction. The corporate rate — and it’s not gonna be phased in from what I understand. They’re gonna slash this thing from 35 to 20%. Now, that one bit of news is what is fueling people like Robert Reich and any other Democrat activist you can name. They are all over TV claiming, “This is a tax cut for the rich. This is a tax cut for the wealthy. This is obscene. This is outrageous. American corporations are already killing people and screwing people and cheating people. They don’t need a tax cut. This is clear evidence Republicans don’t care about people,” blah, blah, blah.
The same predictable, formulaic response to tax cuts that the Democrats offer no matter what. The other response that they’re offering is, “How are we going to pay for this? If we’re gonna let people keep more of their money, that’s going to raise the national debt.” I heard Robert Reich actually talk about the national debt for the first time in 25 years today. He’s never cared about it until today. And he started talking about the budget deficit every year. (imitating Reich) “You Republicans keep saying that you’re for reducing the deficit, the national debt. How you gonna pay for this?”
I get so sick and tired of the question: How you’re gonna pay for it? Steve Moore was the pro-tax cut guest that was on the same time, I think it was on CNN, as labor secretary Robert B. Reichhhh. And Moore pretty much said (paraphrasing), “Well, yeah, yeah, yeah, but I tell you how we’re gonna try, we’re gonna grow the economy. This tax cut is gonna grow the economy, that’s what’s gonna happen. And all we need to go is generate another 1% economic growth on top of the 3% we already got, that could mean another trillion or $2 trillion revenue flowing into Washington, more than enough to pay for it.”
Which, look, strictly as a matter of policy that’d be great if that happened. Tax cuts can cause economic growth and they create new taxpayers. But that’s not my preferred answer. My preferred answer to how are we gonna pay for it, how about the government doing with less for just once in our lifetimes? Where is it written that government cannot get smaller? Where is it written that every year government must spend more? Where is that written? How did this come to be?
Why can’t the notion of the tax cut being paid for be answered by saying, “Maybe Washington should reduce some of its spending”? This offends me like I can’t tell you, this “how we gonna pay for it” question, because what that means is the money’s not really yours. We’re just transferring Washington’s money to you, but somehow we gotta make it up on the other end. So what that means, it’s really not a tax cut when you get right down to it, not in terms of real numbers.
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RUSH: On the Republican tax plan, again, the corporate tax cut, 35% to 20%, big, big target. It’s a good move, folks. We have the highest corporate tax rate in the world. It is why so many American corporations — let me just issue a disclaimer up front. I do not hate corporations. I just want to be very public about the fact; I do not hate corporations.
I do not think they kill people. I don’t think they intend to kill their customers. I don’t think they intend to make their customers sick. I don’t think their purpose is to provide health care or day care centers for the community. I have no problem with corporations at all. Sometimes I’ll have a beef with particular policies. I mean, I can complain with the best of ’em, but as entities, I do not consider them bad. I do not consider them an enemy. I do not consider them a threat. I do not worry about a single thing they do, whether they are globalist, whether they’re mom-and-pop local, it doesn’t matter to me.
What does matter to me is when American corporations have trillions and trillions of dollars held overseas that they don’t bring back and circulate in the U.S. economy because the tax rate is so much higher here than it is around the world. I believe money that American corporations earn selling products would be best circulated in the U.S. economy. And if reducing the corporate tax rate from 35 to 20% will help repatriate that money with a one-time repatriation rate, then so be it, fine and dandy with me.
I have no problem with corporations showing a profit. I have no problem and I don’t suspect corporations of earning a profit. I couldn’t care less what they pay their CEOs. Doesn’t matter to me. My point here is that I don’t come to you with any bias or hatred or prejudice about any of this, but that’s what’s you’re gonna hear from the left. You’re gonna hear that this whole tax cut needs to be broomed and shelved because of the corporate tax rate and it’s a sop to the rich, that it’s the Republicans continuing to be in bed with corporate America. And they aren’t.
The Democrat Party’s in bed with corporate America. The one thing about corporate America that I do dislike is crony socialism. I do not like American CEOs sidling up and making relationships with American governments or presidents. You know, I’m not blind as a bat on some of this stuff. I’m just talking about as an entity, the left hates corporations because they exist. And they use that hatred as a means of opposing any public policy that’s gonna be beneficial to anybody.
And so I’m just telling you I don’t have any preconceived bias or prejudice about the entity of corporations. And I support the tax rate reduction of 35 to 20%. I think everything gets better when tax rates are cut. I don’t look at the tax code as a way to punish people. I don’t seek to see it used that way. I realize I’m in the minority, however. What I believe in is the American economy and the American people. And I am for anything that allows them to be rewarded for the fruits of their labors, their hard work, their investments, their ambition.
I don’t believe the first claim to every dollar should be Washington’s for some silly social program or anything else. I blanch and I get viscerally angry when I hear people react to any tax cut proposal by whining and moaning about how are we gonna pay for it. Why should government never have to do with less? It seems to me the purpose of a tax cut is to actually reduce the size of government. You take less from the people earning it, and when you take less from the people earning it, you are earning less, you’re getting less as government. Fine, static, leave it alone. Let economic growth take care of it.
But if they seek to pay for this, that means they’re gonna go raise taxes somewhere else that they’re not gonna tell you. They’re gonna raise fees somewhere else that they’re not gonna tell you. Or within this tax cut plan there are gonna be some tax increases levied on people who will not complain about it ’cause it won’t matter anyway.
Now, here are a couple of things in this that I actively support. There are proposals in the Republican plan to severely reduce, and in some cases eliminate, the deduction for state and local taxes. This is going to primarily affect blue states and people who live in blue states. The way this works, the deductions for state and local taxes are kind of a courageous move, and it’s a very interesting subject.
Now, you start talking about taxes and it’s easy to lose people because there’s numbers involved and I think taxes, tax tables, tax codes, tax policy, it’s tough to follow even if you’re reading about it, much less hearing about it. But the elimination of deducting state and local taxes, you live in New York, you live in California, that is a chunk of change that you can no longer deduct. But more than that, it’s going to put a crimp in the state governments of those blue states as well. Now, people in Florida, people in Texas, people in Kentucky, we don’t get this tax break because we don’t pay state and local taxes, so we don’t have a deduction for those anyway.
But why should high-taxed states like New York and California get this break? If this deduction didn’t exist — let’s talk about California and New York. You no longer, if this passes, can deduct your state and local taxes from your federal tax return. What that means is, people not getting that deduction are gonna be paying more in taxes and the governments in those states are going to be collecting less revenue. That might make it incumbent on people that run these blue states to start cutting taxes rather than relying on federal deductibility in order to help them skate by.
There are 24 Republicans in the House from high-tax states who seem to be for the budget and for this tax plan. There are 11 who are not. Seven high-tax states receive more than 50% of the value of the deduction on federal income tax returns for state and local taxes. They are California, New York, New Jersey, Illinois, Massachusetts, Maryland, and Connecticut, and they are all Democrat blue states. These states get more than half of the value of the deduction.
Eliminating the deduction is going to increase the taxes those residents in those states pay, and it’s going to eliminate a bunch of collected revenue that those states are no longer gonna get. Why should people around the country be subsidizing rich blue states and big blue state governments? We shouldn’t be! You want to live in a high tax state, pay the freight. And that’s what this is seeking to do. You want to live, or maybe you have no choice, but if you’re gonna elect these kinds of people, if you’re gonna elect people that do nothing but raise taxes on you and spend you into debt, then bingo. Live with it.
“That sounds awfully cruel, Mr. Limbaugh.” No, no, no, no, no, no. It’s not cruel at all. Dollars and cents. It’s real life. It’s called consequences. Taxpayers in seven high-tax states deduct 7.6% of their income in state and local taxes. For taxpayers in other states, the percent of income deducted averages around 4.2%. The epitome of unfairness. Why should all of these big blue Democrat taxpayers get a bigger break because they pay more taxes in those states they live in? They elected people that have done that to them.
If you eliminate the state and local tax deduction — get this. This will put this in perspective for you, as the question is asked, “How are we gonna pay for it? How we gonna pay for it?” Here’s how you pay for it. You eliminate the deduction, federal deduction for state and local taxes. Eliminating the state and local tax deduction would provide roughly — are you ready — dadelut dadelut dadelut dadelut dadelut — $1.3 trillion in new revenue to the federal government every year.
Eliminating the state and local tax deduction is going to of course raise the taxable income of all of these people that live in these deep blue Democrat states. When they can’t deduct their state and local taxes, their taxable income goes up, and the increased taxes they’re gonna pay regardless what happens here with the tax tables and the brackets, this is how we’re gonna pay for it. I love it.
Robert B. Reich and all these other clowns are running around, how we gonna pay for it, how we gonna pay for it? We’re gonna make rich blue state Democrats pay for it, that’s how because we’re gonna eliminate their deduction for state and local taxes, and in the process their increased taxes that they will combined owe on their federal return equals about $1.3 trillion a year. Why, that can alone wipe out the federal deficit.
What’s the federal deficit, $666 billion now? Or do they say 667 ’cause nobody wants to say 666? We can eliminate the federal deficit simply by eliminating the deductibility of state and local taxes in seven deep blue big Democrat states. What’s not to like? “Mr. Limbaugh, Mr. Limbaugh, it sounds like you have some class envy.” No. Me? Class envy? Oh, no. I’m just for people paying their fair share, you creepy leftists. It’s about time.
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RUSH: We’re not raising taxes on the blue states. We’re just asking for them to contribute more. Don’t look at it as a tax increase. Just asking for greater contributions from the people that live in blue states. The capital gains will not change. It will stay under the Republican plan at 23.8%. The Washington Post says that the Republican tax plan will cap the mortgage interest deduction at $500,000. It’s currently capped at one million.
What does that mean? Well, it means if you buy a house for one-and-a-half million dollars, you can only deduct a mortgage of a maximum of one million. If you buy a $25 million house, you can only — (interruption) No, I know nobody does. I’m just using a number to give you the greatest illustration. Okay, you buy a $10 million house. The most you can deduct now on the mortgage interest is the interest on the first million. That is gonna be capped at 500 grand.
So if you go out and buy a two-and-a-half million-dollar house, your mortgage interest deduction will be only permissible on the first $500,000. You will not be able to deduct the mortgage interest on the whole loan. Now, $500,000 would barely buy you a shopping cart in San Francisco and in New York. Well, it’s not just the blue states.
I mean, I guarantee you that the realtors and the home builders, they’re gonna be all over the Podesta Group and whoever runs it, you know, trying to lobby Congress on this. And they may even call the Russians and ask them for some help, call the Russian ambassador, whoever they have to lobby because they’re gonna look at this as one of the greatest assaults on the home industry ever. The home mortgage deduction has been one of the biggest selling points. It’s a big payment every month. You get to deduct whatever percentage of your monthly payment is the interest on the loan, the mortgage. That’s a significant deduction. They’ve been using that to sell houses for the longest time.
Now it’s gonna be capped at $500,000. Let me run through the rates very quickly, the new rates. I’m not gonna bother you with the old rates. That will just confuse. Trust me when I tell you these are significant improvements for most people, until you start factoring in the lack of deductibility for state and local taxes in the seven deepest blue states in the country. Just in terms of rates, the first rate is a combination — there are two rates now, 10 and 15, that will be combined into one new rate of 12%. And the 12% will be the amount you pay on the first $90,000 you earn.
So if you earn $85,000 a year, your tax rate’s 12%. But you still get your standard deduction, and you get the child whatever it is, the child tax credits and stuff. We’re just talking about the rate here. On the first $90,000 you earn, the tax rate’s 12%. The next tax bracket is 25%. And that is up to $260,000 a year. So if you make $250,000, you’ll be taxed at 12% on the first $90,000 and then 25% on the remaining amount getting you to 260.
The next bracket is 35%. There currently is a 35% bracket now. But in the new 35% bracket all income up to $1 million between $260,000 and one million will be taxed at 35%. So here’s the progression. If you make, let’s say, a million dollars. Use the number. The first $90,000 of it taxed at 12%. The next $150,000 would be taxed at 25%. And then from $261,000 up to one million will be taxed at 35%. These rates replace 35, 33, 28, 25, 15, and 10. The rates now are 12, 25, and 35. The 39.6% rate will remain, and that rate is for all income over $1 million.
Now, these numbers are for people married filing jointly. Unmarried individuals, the numbers are a little lower to accommodate the fact that only one person is paying and filing, as opposed to two. But it’s a grand simplification. It is going to result in people being taxed much less than they are. The rich are still gonna get shafted because their rate is not being eliminated, their rate is not being lowered, and before this is over, it might end up that the rich rate gets raised. Remember, these are just the openers for this.
So here again, the estate tax, by the way, the proposed estate tax goes to zero in 2024. On estates above $11.2 million per person, 40% until 2024 and then it goes to zero, the death tax, the estate tax, 2024. So the first 90 grand taxed at 12%. Then up to $260,000 taxed at 25%. Then up to a million taxed at 35%. So the top marginal rate here for the vast majority of Americans will be 35% on income over $260,000 a year. That’s pretty much the nutshell here.
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RUSH: Okay. We’re gonna get to the phones here. I just want a couple of things here on the tax cut proposal. And, remember, that’s what this is. This thing’s gonna get beat up, it’s gonna get sliced and diced. It’ll probably end up being different than the numbers that we have now. But this proposal repeals, for example, an itemized deduction for medical expenses. It repeals the tax credit for adoption, and it repeals the deduction for student loan interest. Yeah, I see some people shaking their head. Not digging that, huh?
Well, look. Everybody’s ox is gonna get gored if this thing goes through. Somebody’s gonna be mad about something. There’s not a single person here that’s gonna be doing cartwheels over all of it. Hell, folks, I’m gonna be screaming bloody murder except I won’t be. I’m already livid as I could be about this. You don’t hear me complaining, do you? I’m not gonna complain. But there’s things about this that I don’t like, but when you start doing things like this, you’re gonna have bleepers, you’re gonna bleeders, gonna have screamers, squealers, squawkers all over the place. That’s why I say this is gonna change.
The mortgage interest deduction, you wait ’til the home builders and the realtors get hold of that, capping that at $500 grand. Some of these members of Congress the Ways and Means Committee may need additional armed security just to get out of the building today. The proposal also limits the home mortgage interest deduction as previously mentioned for new home purchases, interest would be deductible only on loans up to a half million dollars, down from $1 million today. Existing loans would be grandfathered. If you currently have a mortgage, your current deal will not be changed. But if you refinance — I shouldn’t laugh.
Now, there’s a much larger standard deduction that everybody gets, and because of that fewer people will have a tax incentive to make charitable donations. Tax-exempt bonds could no longer be used to build professional sports stadiums. Private universities with assets exceeding a hundred thousand dollars per student would pay a new 1.4% excise tax on their net investment income. Well, hell’s bells, it’s about time. How many of these universities have these multibillion-dollar endowments and they don’t cut tuition, they never think about cutting tuition. They force their student body into assuming all these crazy loans, student loans.
And one other interesting little factoid. The Washington Post has come out and has excoriated the Democrats for mischaracterizing this. I’m gonna read to you from the Washington Post fact-checker. “In their haste to condemn the GOP tax plan, Democrats have spread far and wide the false claim that families making less than $86,100 on average will face a hefty tax hike. Actually, it’s the opposite.”
So four Pinocchios here. That’s almost as many as you can get from the Washington Post fact-checker. So the Democrats are out there trying to say that the middle class is gonna get soaked and the poor are gonna see a tax increase. It’s just the exact opposite.
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RUSH: Gaylord, Michigan, next. Dennis, welcome, sir, to the EIB Network. Hello.
CALLER: Thanks for taking my call, Rush. First-time caller, longtime listener.
RUSH: Great to have you here with us.
CALLER: I just wanted to bring up the blue state tax cuts in the states — you know, California, New York — they could be good in the long run for future state legislators and congressional folks that could run on a tax-reform package that maybe people will them to now.
RUSH: How so? How do you mean?
CALLER: I mean, so they’re gonna pay more taxes with the tax cut, and —
RUSH: Well, let me… Hang on. People who are just tuning in may not know what we’re talking about. Let me, once again, set the table. The Republican tax proposal contains a proposal to eliminate the tax deduction for state and local taxes that people pay. For example, if you live in California, you could pay — if you’re in the upper bracket out there — you’re combination state and local taxes, the average deduction is 7%. That will be taken away. People who live in California will no longer be able to deduct the taxes they pay state and local from their federal return, which will expand their taxable federal income, and it will also mean that those states receive less money. So you’re thinking this presents an opportunity for Republicans. How?
CALLER: Locally to run on a tax reform in those states because of the new taxes they’re gonna be paying, and once they start paying ’em, they’re gonna feel it, and maybe we can increase —
RUSH: They’ll feel it.
CALLER: (chuckling)
RUSH: They’ll definitely feel it — and, by the way, the most highly taxed and the most populous states where this will affect people are all blue Democrat states. They are New York, California, Illinois, New Jersey; I think Connecticut might be in there. These people are gonna end up paying a much higher federal tax bill because they’re not gonna have the state and local tax deduction, which also means that the states are going to be collecting less money, too.
So his point is that this will open the door for Republicans to run for office in blue states promising tax cuts — state tax cuts, local tax cuts — in order to make up the difference. It remains to be seen if this will actually sail through. There’s gonna be tons of opposition to this. I mean, it’s gonna be big and beaucoup. So the original proposal today probably is not going to be what the final numbers are on anything — the brackets or deductions.
Some of it will stay the same, but there’s gonna have be changes. There will be negotiations and changes. Trump wants this on his desk by Thanksgiving. That means through the House and the Senate by Thanksgiving — and believe me, folks, there are still enough Never Trump Republicans around (like McCain) who will do anything they can to thwart Trump, not to mention the Democrats.
So, in addition to the actually proposal itself, it’s gonna be interesting to me, Mr. Snerdley, to see how the Republicans and Trump sell this. Trump is selling it as Santa Claus. We already heard that today. It will be interesting to see how the actual Republican House leadership and the Ways and Means Committee chairman, Kevin Brady, actually go out there and sell this.