Permanent Underclass: 47% of the Country Pays No Income Tax
April 8, 2010
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.
CALLER: But with the national debt and the way it's still growing --
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.