• This is a rush transcript from "Your World with Neil Cavuto," December 12, 2007. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: Iowa, you just heard the debate here on FOX. You just heard our polling audience declare Mitt Romney the winner. But, in Iowa, in the polls, he is not, not by a long shot. This guy is.

    With us now, GOP presidential candidate and president front-runner as well, Governor Mike Huckabee.

    Governor, good to have you.

    MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE: Thank you, Neil. Great to be back with you.

    CAVUTO: This was a weird debate, Governor. Alan Keyes was there. I don't — I don't — is he running for president?

    HUCKABEE: Well, apparently, he is. I was somewhat surprised when I walked out on the stage and I saw the podium for him, because he has not participated in the others. And I don't know that I have seen him campaigning in any of the states, but he was here.

    CAVUTO: All right. Do you know who invited him?

    HUCKABEE: No, I don't. I mean, obviously, the debates are in the charge of the newspaper and the local Iowa public television.

    CAVUTO: All right. I have so much to get into, Governor. So, if you will excuse my impolitic remark here, what did you think of the moderator of that debate?

    HUCKABEE: Well, I think she handled it overall fine.

    I was kind of looking for a little bit more interaction with the candidates...

    CAVUTO: Right.

    HUCKABEE: ... and perhaps a little bit more liveliness.

    Frankly, given all the liveliness I have been through the last few days, it was kind of nice to walk away...

    (LAUGHTER)

    HUCKABEE: ... with all my blood still in my body.

    CAVUTO: She kind of reminded me of the school mom on Charlie Brown, but that was just me.

    But, Governor, in a way, you just hit on it. Because maybe this debate was a stilted format, they really couldn't lay any gloves on you, which, presumably, is the position you want to be in if you're the front-runner in the polls, as you are by a fairly substantial margin in Iowa. What do you make of that?

    HUCKABEE: Well, I think it was maybe an opportunity to actually discuss issues.

    I'm convinced that a lot of people across America, including — and maybe especially — people in Iowa, are really tired of the sort of hacking up and kneecapping kind of politics that we have seen.

    It's very distasteful to most people in Iowa. I think Americans want to vote for somebody, not just against somebody. And, so, in that respect, people at least got to see what our answers were to the questions, even though, at times, I wish we had had a little more time to get into some of the depth of issues.

    But, frankly, Neil, that's one of the problems of all these debates, 30 seconds to answer a two-minute question is really kind of difficult. And it's been one of the common problems of all of the debates.

    CAVUTO: Yes. Well, I would agree with you on that, Governor.

    Naturally, being the economic nerd here at FOX, Governor, I took particular interest in the economic-related questions. And, when you referred to taxation in this country — and I hope I have your wording right — you said, excessive taxation penalizes the productivity of a company.

    Did I take that to mean, Governor, that you would be open — I know you're for a Fair Tax, but you would be open for lowering corporate taxes beyond what we see now?

    HUCKABEE: Oh, eliminating them. Corporations don't pay taxes, Neil. They just pass it on to the customers in the form of higher prices. There is no such thing as a corporate tax. All you do is build it in.

    And it creates an invisible tax that the average taxpayer never knows he has paid. That's why I'm for the Fair Tax. The reason we need a transparent tax system, rather than the one we have, is because taxpayers are paying taxes hidden into the products, hidden — taken out of their paychecks. They have no idea how much tax they really do pay.

    CAVUTO: But, you know, the rap against you for that position on corporate taxes is that you are in the pocket of corporate fat tax — fat cats. What do you say?

    HUCKABEE: Oh, the last thing.

    In fact, the big business people are the ones who are most afraid of me, for reasons I don't understand. But I would also make the argument that the real reason that this makes more sense is because of small business, where 80 percent of our jobs come from.

    And it's real tough to crank up a small business today, because the large businesses have plenty of lawyers and accountants to keep them in compliance. I'm talking about that guy that starts out on his kitchen table with a sketch of a dream and an idea to start a business.

    He can't afford all those compliance issues. And that's why we need to make it much simpler to achieve the American dream, by making the tax system one that is met at the consumption level, not at the productivity level.

    Imagine what kind of productivity and entrepreneurial leadership we would turn loose if we didn't complicate people with all of those issues of taxation, regulation, and litigation.

    CAVUTO: Let me ask you this, Governor.

    Yesterday, on FOX Business Network, we — we had Senator Hillary Clinton on, along with Warren Buffett, both of whom are espousing raising taxes on the upper income. It is a moving target, as you well know, sir.

    HUCKABEE: Yes.

    CAVUTO: But the argument for that is that, that is a way of evening this great divide.

    What do you make of the strategy of raising taxes on the upper income, since that is the group that has benefited the most substantially in this boom?

    HUCKABEE: Well, again, it's a very wrong-headed idea, and it doesn't help the economy.