This is a rush transcript from "Your World," January 21, 2015. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: To Louisiana Republican Governor Bobby Jindal, who has also seen what is going on here.
Governor, good to have you.
What are you getting a sense of what is a fair -- a fair tax for the uppermost income? Right now, it's officially set at 39.6 percent, but, as you know, with surtaxes for paying for the health care and everything, closer to 44 percent, 45 percent. But what do you think should be a fair top rate?
GOV. BOBBY JINDAL, R-LA.: Well, Neil, first of all, thank you for having me back on your show. It's always great to talk to you.
Three things. One, with this president, you have always got to be not -- I think the real word you need to be asking is, how do you define wealthy? With this president and with the Democratic governors, they keep saying a millionaire tax. And they start applying it lower and lower level of incomes. There's never enough money for them.
In terms of looking at the tax code, I think that's the wrong way to look at the tax code. This president wants to be all about redistribution. I think, in America, we look at federal taxes, we look at federal policies to promote opportunity and growth, not redistribution, like they do in Europe.
Finally, in terms of the overall size of government, historically, it's been around 18 percent of our economy. It's been near record post-World War II highs, 24 -- over 24 percent. It's now still in the 20s, but it's going down. I think we need to be looking at shrinking government, lower tax rates, fewer credits, fewer carve-outs, fewer crony capitalism and special deals.
CAVUTO: All right, how much lower? But how much lower? If the top rate now is about 40 percent, what would you think it should be lowered to?
JINDAL: Well, look, I think we need -- I think the way you look at that is, you need to prioritize what the federal government should be doing, shouldn't be doing. We have got to defend our country.
There's a lot of nonsense the federal government is doing right now that we shouldn't be doing. We need to be paying down our debt. At the end of the day, I think that historical -- if our federal government historically has been about 18 percent of the economy, that's not a bad level to get back to. That's a lot lower than we are today. Get the federal government out of things, and then you can figure out your tax rates.
CAVUTO: You say 18 percent, to get back to that level. Do you think all comparable tax rates should begin at around that level?
JINDAL: No, I'm saying, Neil, that you start by saying, all right, if the government is spending 18 percent of the economy, then you can figure out, how do you get a lower, flatter tax right now?
CAVUTO: Got you.
JINDAL: But the rates are very high. But then there are carve-outs, so not everybody has to pay those taxes.
And that's kind of -- that's ridiculous. Right now, if you have got a lobbyist, if you're connected, you can get special treatment. So, you figure out what the core functions of the federal government are, not all the nonsense they're trying like Obamacare and all this stuff they're trying to do today.
I think it should be about -- and I think they should cap it, by the way. I think we need a constitutional amendment saying the federal government shouldn't grow faster than our economy, than our private sector economy, so they don't keep spending more while our paychecks aren't growing.
CAVUTO: All right. Now, I'm sounding obnoxious, and I apologize.
If you became president -- and you're in that short list to possibly run for president -- are you telling me that you would advocate cutting all tax rates across the board, including that top one, or what?
JINDAL: Absolutely. I think rates need to be lower on everybody.
CAVUTO: Can you give me a hint of what you would bring them to?
JINDAL: But, again, I think, Neil, the way you figure that out is if you say what -- first, you have got to cut spending, prioritize what the federal government should and shouldn't be doing. I have said it, a target of 18 percent.
CAVUTO: Right. Right.
JINDAL: And then you can figure out what your flat tax rates are.
You figure out, what is the cost? Right now, the real problem is, we don't even know the real cost of all the giveaways and hidden subsidies and carve-outs there are in the tax codes. We know there are plenty of folks that can hire lobbyists, aren't paying the same rate that you and I pay.
But that's how you figure out what your rates should be. But they definitely should be lower than they are today. They should definitely be flatter. Look, we have done that in the state of Louisiana. We have cut our budget 26 percent. We have cut -- largest income tax cut in our state's industry.
We could do the same thing at the federal level as well.
CAVUTO: Well, you know, back in your state, your -- your -- the Times- Picayune newspaper editorial blasted your performance in that regard, Governor, saying you're looking at a $1.4 billion deficit because you're sticking to principle all right when it comes to finding the president's health care law an anathema, but you're not taking the Medicaid money that other Republican governors who are similarly opposed to taking.
I think Chris Christie has. And as a result, you're in a deep hole and a lot of Louisianians are hurting. And what do you say to that?
JINDAL: Well, Neil, three things.
The shortfall that is projected for next year, by the way, is based on falling oil prices. Falling oil prices are great for consumers. I would much rather have our consumers have more money in their pockets, even if it means less revenue for government.
CAVUTO: I think what they're saying, though, sir -- I'm sorry -- just to be clear, they're saying that these 242 uninsured Louisianians would not be in the potential pickle they're in if you had sworn off this extra Medicaid money.
What do you say?
JINDAL: Well, the reality is, if we had done Medicaid expansion, we would have kicked over 200,000 people out of private insurance.
More people would have been moved out of private insurance into Medicaid than uninsured would have been moved into Medicaid. That makes no sense to me. We're going to have more people in the cart rather than pulling the cart. It would have cost our taxpayers over a billion dollars over 10 years.
So we can't simply keep printing money, borrowing money and pretending like nobody has to pay the bills. And then finally the Medicaid system is not a very effective program. You look at the Oregon study, they showed -- this was a Harvard study -- they looked at Medicaid expansion up there and they actually showed, Neil, after a couple of years, there was absolutely no average improvements in physical health care outcomes.