Arguing with Rand Paul, Letterman Urges Tax Hike to Pay Wisconsin Workers and Displays Ignorance of Tax Burdens

Catching up with a Thursday night appearance by Senator Rand Paul to plug his new book, Paul’s segment on the Late Show exposed David Letterman as an arrogantly ill-informed ally of Wisconsin’s public employee unions: “Why don't we just raise the taxes and let these folks have their collective bargaining, have their union representation and go back to their jobs? Raise the taxes on the wealthy.”

When Paul tried to educate Letterman about how a small percent of the wealthy pay far more than their fair share, Letterman was an oblivious student as he baselessly countered: “I think there's something wrong with those numbers. I don't know what it is exactly, but I'm pretty sure there's something wrong with them.”

Paul had outlined his wish to reduce government spending, prompting Letterman to retort: “What would be so wrong then in terms of leaving the public sector alone and reducing tax benefits for the wealthy and large corporations? Why couldn't you make up your money that way?” (Audio: MP3 clip)

Paul tried to teach Letterman some basics: “If you look at the taxes, if you look at the income tax, the top one percent pay about a third of the income tax. The top 50 percent -- those who make $70,000 and above -- pay 96 percent of the income tax, so the middle class and above are paying all of the income tax.”

Instead of appreciating the facts relayed by Paul, Letterman condescendingly impugned Paul for inaccurate information while simultaneously admitting his own naivete:

I think there’s something wrong with those numbers. I don't know what it is exactly, but I'm pretty sure there’s something wrong with them. Because you’re talking about -- thank you, you're applauding my stupidity. God bless you. I just don't, I don't think it makes sense to me. You look at these people in Wisconsin, and we're talking about, you know, the people we've been talking about, why don't we just raise the taxes and let these folks have their collective bargaining, have their union representation and go back to their jobs? Raise the taxes on the wealthy or don't even cut the taxes.

In fact, Paul under-estimate the burden put on the top one percent. In the latest year for which IRS data is available, 2008, “the top 1 percent of tax returns” – those earning over $380,000 -- “paid 38.0 percent of all federal individual income taxes and earned 20.0 percent of adjusted gross income,” the Tax Foundation’s Mark Robyn and Gerald Prante reported late last year. The top 50 percent paid 97.3 percent of income taxes collected in 2008.

Robyn and Prante also noted: “The top 5 percent,” who made more than $159,000, “earned 34.7 percent of the nation's adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.”

From the Thursday, February 24 Late Show with David Letterman on CBS, transcript provided by the MRC’s Brad Wilmouth who corrected the closed-captioning against the video:

DAVID LETTERMAN: I saw a thing the other day that said that the Republicans are in favor of tax cuts for big corporations and people making a substantially wealthy income. Is that true?

SENATOR RAND PAUL (R-KY): Well, I think ultimately-

LETTERMAN: How would that help us with the-

PAUL: Well, I think ultimately we're for shrinking the public sector and growing the private sector. We think that when you go to Wal-Mart or K-Mart or Target -- am a allowed to say those?

LETTERMAN: Yeah, sure.

PAUL: When you go there, you get to vote, you get to vote on which businesses succeed, so that’s what you want in the private sector. Whereas, in the government sector, you don't get to vote. You may get a special perk if you gave a contribution-

LETTERMAN: Now, who represents the people, who people the government sector? Who are they? We’re talking about the firemen, policemen-

PAUL: Sometimes-

LETTERMAN: -teachers.

PAUL: Those are some basic functions of government, but there’s also contractors. There’s defense contractors. There's contractors of green or renewable energy-

LETTERMAN: But you want to-

PAUL: -and they give a lot of money.

LETTERMAN: Am I misunderstanding here? You want to shrink that strata of American workers, and give tax breaks to people who well could afford to pay a higher tax rate. Are we hurting the middle class -- guys like you and me -- are we hurting the middle class?

PAUL: Yeah, not necessarily. I think what’s going to have to happen is you’re always going to have to ask yourself: Where is a function better handled? Is it better that late-night comedy be done by private business or by the government? And we say: Who would do it better? And if there’s a question, maybe government does it, but most of the time the answer is the private sector does it better because you get rewarded or you will fail based on whether they laugh, based on whether you get advertising. That’s the private sector.

LETTERMAN: You’ve confused me now because if we’re talking about these people, is it, in fact, the people in the middle class -- that represent the middle class -- that hold most of these jobs - teachers and firemen and hospital workers and on and on and on and on, so they will lose their government paycheck. Is that right?

PAUL: No, I don't think so. I think what we’re talking about is we have certain things the government has to do, and certain things the private sector has to do. For example, fire protection, we usually say the government can do it. And army, we usually say the government does it. But there are certain things -- late night comedy, being a doctor, being a plumber -- that we leave to the private sector. And what my philosophy and the Republican philosophy is leave as much of that as you can in the private sector, and try to have the public sector only do what it needs to do or what we have to have done in the public sector.

LETTERMAN: Well, you mentioned plumbers, but plumbers aren't typically speaking government employees.

PAUL: Exactly, and so there are certain things that you leave in the private sector and then the public sector, but you want to always keep the public sector at a minimum because they’re inefficient. I will say often that it's not that government is inherently stupid, although that's a debatable point, they don't get the same signals. You and I get a signal. You have to pay your employees. You have to make a profit. You have to make earnings for the people who want to advertise with you. You’re forced to do something to give a product. The public sector doesn't do that.

LETTERMAN: But why, what would be so wrong then in terms of leaving the public sector alone and reducing tax benefits for the wealthy and large corporations? Why couldn't you make up your money that way?

PAUL: The interesting thing that most people don't realize -- including a few of those who were clapping -- don't realize is that the wealthy do pay most of the taxes in our country. The top one percent-

LETTERMAN: But why are they eligible-

PAUL: Now you have clapping on both sides.

LETTERMAN: But the government is suggesting, or the Republicans are suggesting that they're entitled now for tax benefits, tax breaks, they’re reducing the tax rates they’re paying.

PAUL: If you look at the taxes, if you look at the income tax, the top 1 percent pay about a third of the income tax. The top 50 percent -- those who make $70,000 and above -- pay 96 percent of the income tax, so the middle class and above are paying all of the income tax. We are paying our fair share. Even you are probably paying your fair share.

LETTERMAN: Right, I think there’s something wrong with those numbers. I don't know what it is exactly, but I'm pretty sure there’s something wrong with them. Because you’re talking about -- thank you, you're applauding my stupidity. God bless you. I just don't, I don't think it makes sense to me. You look at these people in Wisconsin, and we're talking about, you know, the people we've been talking about, why don't we just raise the taxes and let these folks have their collective bargaining, have their union representation and go back to their jobs? Raise the taxes on the wealthy or don't even cut the taxes.

PAUL: But I guess the argument is, is you have to look at the details and say: Have we been generous with teachers in Wisconsin? The average teacher in Wisconsin is making $89,000 a year to work nine months.

LETTERMAN: They should be making twice that. The school system in the United States of America is in desperate need of attention. I mean, we agree on that. The school system is bereft. It needs attention. It has fallen behind. We are embarrassingly trailing other nations in terms of public schools.

PAUL: Yes, we can agree, we can agree to the problem, but here's the rub. In Washington, D.C., we spend $20,000 per pupil and we still have a crummy school system that’s failing our kids, our kids are dropping out. Half of them are dropping out before they finish high school, their scores are abysmal, and we spend more and more money. So money's not always the answer. You have to do something, but I think part of the problem is we’ve taken education from the local sphere and now we control it from Washington. I think that's been a mistake.

LETTERMAN: Well, something has gone haywire because it's not working. And I'm not sure that I agree with that argument. And, by the way, if we’re going to throw money at something, what about education? You know, for God’s sakes, let's just see if it improves somehow.

PAUL: Well, I think competition makes things better. You have to compete with other late night comedians. I have to compete with other physicians. I think competition makes us better. Think if you didn't have that guy, what’s his name, you have to compete with.

LETTERMAN: You know, I think he's wrong about some of these things. I just can't tell you why. Sorry.

— Brent Baker is Vice President for Research and Publications at the Media Research Center. Click here to follow him on Twitter.