• This is a rush transcript from "Your World With Neil Cavuto," November 3, 2008. This copy may not be in its final form and may be updated.

    (BEGIN VIDEO CLIP)

    SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: Under my plan, tax rates will actually be lower than they were under Ronald Reagan.

    Tax rates for middle-class families will actually be less than they were under Ronald Reagan.

    Less than they were under Ronald Reagan.

    (END VIDEO CLIP)

    NEIL CAVUTO, HOST: Well, Barack Obama using Ronald Reagan to pitch his tax plan, including this op-ed appearing in today's Wall Street Journal that states taxes under an Obama administration will be lower for most folks than under a Reagan administration.

    New Jersey Senator Robert Menendez has looked at the math as well, and concurs.

    Senator, I know what he's saying on capital gains and about the tax increase at the time that Ronald Reagan had to sign into law in 1986. But the fact of the matter is, when Ronald Reagan took office, he was bringing all tax rates down. Barack Obama would be bringing a couple of key ones up.

    SEN. ROBERT MENENDEZ (D), NEW JERSEY: Neil, the bottom line is, is that Barack Obama would give 100 million Americans of this country making $200,000 or less, which is about 95 percent of all working families in the country a $41,000 tax break.

    Video: Watch Neil's interview with Robert Menendez

    CAVUTO: Even if they pay no...

    MENENDEZ: And — and...

    CAVUTO: Even if they pay no taxes at all — no income taxes at all.

    MENENDEZ: And — no, we're talking — we're talking about working families in this country.

    And the other thing is, is that, when he says — when he makes the comment...

    (CROSSTALK)

    CAVUTO: No, no, no. I'm talking about income taxes, Senator.

    (CROSSTALK)

    MENENDEZ: I'm talking about income taxes. And when he makes the comment that he would be lower than Ronald Reagan, it's true.

    For middle-class income tax individual tax rates, he would be at 4.3 percent. Ronald Reagan, at its lowest, was around 9.3 percent. And, when you talk about capital gains taxes for families making over $250,000, it would be about 20 percent, vs. Ronald Reagan's 28 percent, while giving that 100 million — while giving that 100 million individuals in the country ultimately a $1,000 tax break.

    CAVUTO: Whoa, whoa, whoa, whoa, whoa. You're talking — no, no, no, no, no, no. No. No, you're doing it again.

    Senator — Senator, I'm not interested in a stump speech. I'm interested in some facts.

    MENENDEZ: That's not a stump speech. I'm giving you facts.

    CAVUTO: The fact of the matter is — no, no, no — the fact of the matter is you are equating a 20 percent capital gains rate with what some in passing could assume is the new top rate. The new top rate would rise to close to 40 percent under a President Obama, when, with Ronald Reagan, he lowered that from in excess of 70 percent to 28 percent.

    Where do you get the fact that that would be net higher than what Mr. Obama's planning?

    MENENDEZ: Middle-class families spending over — making over $250,000 a year — over $250,000 a year — would be at a tax rate of 20 percent. Ronald Reagan had it at 28 percent. That's significantly different.

    CAVUTO: No, what tax rate, Senator? Are you talking capital gains?

    MENENDEZ: The capital gains tax rate. Capital gains tax rate.

    CAVUTO: All right. All right.

    Now, I'm talking the one rate that you guys seem to be ignoring. Ronald Reagan reduced that one, the big enchilada, the top rate, from in excess of 70 percent under Jimmy Carter down to 28 percent.

    Now, that's the rate I'm talking about. Barack Obama is going to take that rate...

    MENENDEZ: And make it 20 percent.

    CAVUTO: ... now at about 30 — no, no, no.

    Senator, do you know these numbers?

    MENENDEZ: I do.

    CAVUTO: It's 35 percent now. He's going to bring it up to 39.6 percent. To bring you back, Senator, I'm talking the top marginal rate.

    MENENDEZ: I am talking about families — maybe you want to talk about different families.

    I am talking about families making over $250,000. They would be paying a 20 percent capital gains rate, vs. 28 percent under Ronald Reagan.

    At the same time, we would be giving 100 million families in this family...