• With: Gov. John Kasich

    This is a rush transcript from "Your World," February 26, 2015. This copy may not be in its final form and may be updated.

    NEIL CAVUTO, HOST: All right, now to CPAC, or is that really see every presidential candidate PAC? Because it`s day two of this conservative powwow. And they`re all there, all of them, that is, except this guy, Ohio Governor John Kasich, who has been working on other things, a tax offer for his state that he argues is too good for conservatives or liberals to refuse.

    It`s the closest he comes to being Tony Soprano. Anyway, the governor is here to explain.

    Governor, good to have you back.


    CAVUTO: What is this all about? Because you`re looking at raising some taxes, cutting other taxes. Explain.

    GOV. JOHN KASICH, R - OH: Well, Neil, here`s the thing.

    I have the largest tax cut in the last four years in the country, $3 billion. And this would bring about a $500 million net tax cut. But, Neil, you know, governments have to raise some revenue, so I wanted to raise it in the way that is the least harmful to the private economy.

    So, I`m trying to get Ohio to really reinvent itself. We have put in an income tax in years ago. I don`t think it served us well. And I want to move towards a tax system that encourages investments, risk-taking and, of course, the creation of jobs.

    And in order to do that, we will need some tax reform. You know this from all the people you have on your show. And I would rather rely more on a consumption-based tax system, and reduce our income tax, so that all the successful rich people -- I wouldn`t say all of them, but many of them -- don`t go to places like Florida, where taxes are much lower.

    And we need new industries, Neil. We can`t rely just on steel companies. We need to have cloud computing and data analytics and I.T. -- all kind of I.T. programs. So Ohio has to reinvent itself.

    And I think we need to have a good national debate about the fact that income taxes are anti-growth and anti-job, by and large, and that we should rely on a tax that gives people more choice, which is a consumption tax.

    So, I`m not only cutting taxes, and will have a net tax cut of at least $500 million added to $3 billion we have already done, but we also want to change the very way in which we operate, so we can encourage more economic growth, more new jobs, keeping more young people in the state of Ohio, because it...


    CAVUTO: Where would those consumption taxes be, Governor? What would you slap the taxes...

    KASICH: Well, one of them on big oil.

    Right now, we tax big oil companies that take a lot of this value out of our state at 20 cents. You wish you would be taxed 20 cents on what you get paid, Neil, at Fox. I want them go to about 6.5 percent, which is very competitive.

    And when you look at some of the biggest oil-producing states, like North Dakota, we would be lower. And so I think that, as they take our wealth out, they ought to pay us for that, and we can use it to cut everybody`s income taxes in the state.

    Furthermore, we have had a tax system that has been very, very positive for manufacturing. We don`t want to get rid of that tax. But we want to raise it a little bit, so that our small businesses will pay no income tax at all up to $2 million, because I want to encourage entrepreneurship.


    CAVUTO: This is very brave different kind of stuff, but true to form, you`re ticking off both sides here. A lot on the left are saying it`s regressive, what you`re proposing.

    Those on the right, particularly business interests, say you`re going to scare businesses away. Chamber of Commerce in your state had been saying, if we have an anti-competitive tax climate, we`re not going to be able to grow the jobs.

    What do you say that?

    KASICH: Oh, Neil, Neil, Neil, Neil, when I -- when I came in, we were $8 billion in the hole and had 89 cents in the rainy day fund and we lost lot 350,000 jobs.

    Now we`re up almost 300,000 jobs since I have come in. And we have got the largest tax cuts in America, and we`re running a surplus of almost $2 billion.

    CAVUTO: So, I think what they`re saying is, don`t screw it up. You did a good thing. Don`t screw it up.

    KASICH: Oh, Neil, Neil, Neil...

    CAVUTO: Yeah.

    KASICH: ... Ohio needs to move to a tax system that encourages economic growth and new jobs.

    Who blocks this stuff? Special interests. You report on it, your show, all the time. If you have got something, you don`t want to change, even if it`s going to benefit the broader group. And you know what? I`m not here to play patty-cake or be in a position of where I make all the special interests happy.

    Over time, Ohio will do better. Ohio is doing much better than what we were before I came in here. So, we have got an additional plan, and we believe the additional plan will yield more growth.

    So, I mean, anti-tax? I don`t know who is saying that. But get me their name. I`ll give them a call.

    CAVUTO: All right, this was your Cincinnati Chamber of Commerce spokesman, all right?


    CAVUTO: But, having said that, I want to ask you about the...


    KASICH: Hey, Neil, let me ask you a question.

    CAVUTO: Go ahead.

    KASICH: Let me ask you a question. Don`t you think that you want to have a tax system that is the least amount of injurious to the private economy? And if you tax investment and risk-taking, -- and I will give you a good example.