• With: Sen. Rand Paul, R-Ky.

    This is a rush transcript from "Your World," December 19, 2012. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST OF "YOUR WORLD": Did you hear about this? A French actor feeling fried, fed up with sky-high taxes, Gerard Depardieu, is fleeing because France won't stop hiking taxes on him. That massive 75 percent top tax rate for the rich, well, it includes him, and he ain't happy. Let's just say it's not sitting well.

    In fact, he's going to Belgium. And it's not just for the chocolates. Lower tax rate. So, goodbye, France.

    Rand Paul not surprised. He says it's going to be a scene repeated here if the taxes get out of whack here.

    That is just what you are worried about, right, Senator?

    SEN. RAND PAUL, R-KY.: Well, money goes where it's welcome. So, you raise taxes high, money will flee and go to other places.

    In the United States, you find this. High tax states like Illinois and California are seeing people leaving in mass exodus. We have a corporate income tax here that is 35 percent. There's one that's 15 percent in Canada. If you have a new company you want to open up, where would you rather open up? In a country with a 35 percent income tax or 15 percent?

    (CROSSTALK)

    CAVUTO: But, realistically, a lot of companies don't pay at that rate. I see what you are saying. It certainly will never get as low as 15 percent -- for some companies, maybe.

    But it is a very high rate. Then when the president was apparently bandying about the idea of lowering corporate tax rates to bring more Republicans into a deal that would hike personal income rates, that hasn't been discussed anymore, but how did you or would you have felt about that?

    PAUL: Well, see, the problem up here is everything has to be some enormous deal. And we can never get all the moving parts together. And then we head towards a deadline or we lurch towards a deadline.

    And, then, all of a sudden, oh, we don't have enough time to make a deal. What I would say is separate these out into smaller pieces. I think lowering the corporate income tax is an imperative. We need to do it. But just don't wait for tax reform, which might take a year or may never come. Let's just lower the corporate income tax. We could pass that tomorrow.

    CAVUTO: All right, but in the meantime, you have to get a deal done in, what, 12 days or something like that. Do you think you will have one?

    PAUL: You know, I think something's going to happen.

    I think it won't be good for the country, but I think the president will get his way. He's demanding that taxes go up and we will get a tax increase. But I think when your economy's growing at less than 2 percent; I think tax increase or the rate increase may actually bring in less revenue. It may cause less economic growth and more unemployment.

    So, I think it will be counterproductive and it's the absolute wrong thing to do. But I think he will get his way, because he stubbornly wants to raise taxes.

    CAVUTO: You know, I was with you in that Rotunda just a week ago, Senator, and I think we touched on it then. What is it about you guys, I'm talking generally, Republicans and Democrats, where even facing the brink, even facing what could be, by some economists' count, an inevitable recession if a deal isn't done, can't you do a deal? What is it?

    PAUL: Well, I think the recession really doesn't have so much to do about the deal. I think the recession has to do with an economy that's sluggish for many reasons. We are over-regulated and we're overtaxed. And we have a huge burden of debt.

    CAVUTO: No. But I'm talking any circumstance, even under the brink of war; I don't think you guys could get anything done.

    PAUL: Under any circumstances? Say that again?

    CAVUTO: Even under the brink of war, the threat of war, I don't think you guys could cobble together an agreement on anything.

    PAUL: What, to raise taxes?

    CAVUTO: To do anything.

    (LAUGHTER)

    PAUL: You're saying that we are incompetent and that we can't get anything done.

    CAVUTO: Incapable, incapable of doing things.

    PAUL: You know, the -- I don't really want to debate the other side of that question, Neil. That's a tough question to argue the other side.

    What I would say is we would be -- appear to be more competent if we actually structured and did committee work and we didn't wait for a deadline, if we broke up the problem into smaller pieces.

    Immigration, for example, there's at least five different immigration bills that Republicans and Democrats agree to, but the president says, no, he won't support any immigration reform unless he gets everything he wants. Same with tax reform. Same with Social Security reform. Break it up into smaller pieces and let's pass what we can agree to.

    I think means-testing, we could agree to.

    CAVUTO: So much out there we could agree to, but we don't -- we don't do it.

    Senator, thank you very, very much.

    PAUL: All right, thanks, Neil.

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