Art Laffer: GOP Candidates Better Off Being Less Specific About Tax Plans
BARTIROMO: “Welcome back. Without a doubt, tax reform, jobs shaping up to be one of the biggest issues of the 2016 presidential campaign. But which Republican candidate has the best plan for the American people given the current state of the economy? We want to bring in Art Laffer, he's a leading economist and founder and chairman of Laffer Associates. He's the former member of President Reagan's economic policy advisory board. And, Art, it’s always wonderful to see you. Thanks so much for joining us.”
LAFFER: “Thank you, Maria. Weren’t those two interviews just amazing? I mean you got Marco Rubio and Carly Fiorina, I mean they are unbelievably high quality. This candidate group is incredible.
BARTIROMO: “Yes, it is a real distinguishable –“
LAFFER: “It’s amazing.”
BARTIROMO: “You know, difference when you look at each candidate and their economic plan. I want to first begin this interview with this question from one of our viewers and he’s on Twitter this morning. He’s — ‘alwaysasoldier’ is his — is his handle on Twitter and he says –“
LAFFER: “OK.
BARTIROMO: “’What constitutes a good tax policy?’ That’s my first question for you, Art.”
LAFFER: “The best tax policy is, you want the lowest possible tax rate on the broadest possible tax base because you want to provide the least incentives to evade, avoid or otherwise not report taxable income, and you want the least places to where people can place their income and not have to pay taxes. That’s the key to economic growth and prosperity through the tax code.”
BARTIROMO: “Because the point is, is we want to create economic growth and leading to jobs. Let me ask you, we — we heard from Carly Fiorina this morning and Marco Rubio. I want to ask you about their plans, or lack of plans, on the economy and taxes in a moment. But first, let’s talk Ted Cruz for a moment because I know that he reached out to you. You advised him. He’s calling for 10 percent income tax for individuals and 16 percent business tax. What else is important about his tax plan that we need to understand?”
LAFFER: “Well, I think those are the two most important features of his tax plan. I mean the rest is it is what deductions or credits you have and there — I mean those are really minor plays. The broad-based play is, he has two low rate broad-based flat taxes which are excellent and very pro-growth and very pro-prosperity. You know, all taxes are bad, Maria. All of them are bad. Some are worse than others. What you want to make sure is you tax people in the least damaging fashion. We — we tax people who speed to get them to stop speeding. We tax cigarettes to get people to stop smoking. Why do we tax people’s incomes, employment and profits? Not to get them to stop earning income or paying people or hiring people. Purely and simply, because we’ve got to get the money and we want to get the money in the least damaging fashion. And Cruz’s is exceptionally good in this regard.”
BARTIROMO: “But can he cut taxes without blowing up the deficit and debt?”
LAFFER: “Oh, sure.”
BARTIROMO: “I mean when you look at all the plans across the board, we’re talking about a cost of between $2 trillion and $12 trillion depending on whose tax plan you look at it.”
LAFFER: “Well –“
BARTIROMO: “Can we afford to lower taxes this much?”
LAFFER: “Well, I don’t think he’s lowering taxes that much to be honest with you. I mean the credit and some of the deductions maybe hit the revenue side, but 16 percent and 10 percent are reasonable numbers to tax a broad-base. So let’s say something on the order of $13 trillion. If you look at that size of a base which is total income or total net business sales, those two bases with 16 percent and 10 percent, you should be able to live on that revenue.”
BARTIROMO: “Does Carly have a tax plan? She says, look, it doesn’t matter if you write it down, anybody can write it down, it’s really about your — your — your policies. And, I don’t know, is that going to fly and what about Trump? Compare Carly Fiorina and Trump on their economic plans.”
LAFFER: “Well, Carly’s plan is less specific, but she understands the taxes more than anyone. I mean she’s really very, very good on taxation. She knows you got to lower the rates and broaden the base. And Donald Trump is the same way. I mean his corporate tax, his personal income tax, they’re all really very, very good. And what Donald Trump told me personally is, if you’ve got a better idea tell me and I’ll change my plan. That’s exactly the way a politician should be. You know, they shouldn’t have to come up with every great idea. They should be able to modify their plans when new ideas come along. And I think all these candidates are willing to do that. Rand Paul changed his plan dramatically in a very pro-growth fashion. I mean I’ve got to take my hat off to Rand Paul for doing that. And so did Ted Cruz.”
BARTIROMO: “Yes. Yes, he’s got a 14.5 percent flat tax, Rand Paul.”
LAFFER: It’s great.
BARTIROMO: “Does Ben Carson have a plan? He’s been really vague about this.”
LAFFER: “He’s following the old Reagan motto, is no specificity, don’t do that until you get into office because you’ll have to deal with the Senate Finance and the House Ways and Means and senators and press secretaries and Treasury and all that. The less specific your plan, the better off you are because you paid the principals. In this regard, Ben Carson has done a fantastic job; 10 percent sort of flat tax, it’s the fairest tax, he’s completely correct on that. He says it might have to be higher, as high as 15 percent. But what he’s saying on this, no loopholes, no deductions, no exemptions, that’s the exact right way to go to create this economic growth we need.”
