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...
(CROSSTALK)
CAVUTO: All right, well, there — God bless you. You answered my question.
MENENDEZ: ... a $1,000 tax cut.
CAVUTO: Now answer my other one, the one that pertained to the top marginal rate that was 28 percent when Ronald Reagan cut them, to close to 40 percent now.
MENENDEZ: I — I'm not sure about that rate. All I can tell you is, is that the...
CAVUTO: Barack Obama wants to bring that to 40 percent. That's all I'm saying.
(CROSSTALK)
MENENDEZ: I don't know where you get that, Neil. I don't — I haven't seen...
MENENDEZ: ... him say that he's going to bring it to 40 percent.
CAVUTO: The Obama campaign, Senator. He's the one who says he wants...
MENENDEZ: I don't — I don't agree with you on that. The bottom line...
CAVUTO: Senator — Senator...
MENENDEZ: ... is I haven't read that, and I haven't seen...
CAVUTO: Senator.
MENENDEZ: ... where you extrapolate that from.
CAVUTO: Please, Senator, you are a genius. You're not — clearly, you're playing with me here. You know that...
MENENDEZ: Neil, you — you — you...
CAVUTO: Senator, I am talking...
MENENDEZ: ... have your view, and you love to promote it.
CAVUTO: This isn't a view, Senator.
MENENDEZ: And I understand that. But the bottom line is...
CAVUTO: Senator, this is not a view.
MENENDEZ: ... what I'm talking about is that — is that universe of those families making over a quarter of a million dollars a year, they would pay a lower rate than Ronald Reagan...
CAVUTO: I have moved on from cap gains, Senator.
Do you know what Barack Obama wants to raise the top rate to? The top income rate, do you know what he wants to raise that to?
MENENDEZ: I don't have that information.
CAVUTO: Thirty-nine-point-six-percent, what it was under Bill Clinton.
Now, now, do you know the difference between 39.6 percent and 28 percent? Do you know which is higher?
MENENDEZ: Neil, you know what I do know, is that, under John McCain, that 100 million American gets zero, but a Fortune 500 CEO gets $700,000. The biggest corporations in America get $200 million. The oil industry gets about another $2 billion to $4 billion.
CAVUTO: Senator...
MENENDEZ: To me, that is a redistribution of income.
CAVUTO: ... you sound like me with my college professor on an oral exam I was ill-prepared for. You're switching the game here.
I'm not saying...
(CROSSTALK)
MENENDEZ: I'm not switching the game.
I'm talking about the facts that maybe you don't want to talk about. But, at the end of the day, the two differences here are fundamentally different. Do you give 95 percent of all working families in this country a $1,000 tax break, or do you give the Fortune 500 CEO a $700,000 tax break?
CAVUTO: All right, so you're — OK. First off, I'm just going to play your silliness, Senator, because you're not going to answer my question. I will just play in your little world.
One is this, Senator, that you are...
(CROSSTALK)
MENENDEZ: Now, Neil — Neil, you don't have to be insulting, Neil, to get your point across.
CAVUTO: Senator, no, you are insulting our viewers by not answering simple math questions.
My point is this. So, the 95 percent that you say are going to get a tax break under an Obama administration, do you recognize that half of those folks do not pay income taxes at all?
MENENDEZ: No, I don't recognize that.
And the bottom line is, I don't know where you're extrapolating that from. The bottom line is, 95 percent of all...
CAVUTO: Senator, this scares me, because you are a prominent United States senator.
MENENDEZ: ... working — working families — of — 95 percent of all working families making under $200,000 a year would get a $1,000 tax break.
CAVUTO: Senator, God bless you. I give up. You just wore me out.
But I would love to have you back, but — and I would love to show you the tax code. Maybe you could take a peek at it.
(CROSSTALK)
MENENDEZ: Well, Neil, even — even though I always enjoy being on your program, I certainly am not one of those that want to see you leave as one of the anchors. I heard that before.
CAVUTO: Well, that's good to hear, because, I tell you, at this point, I will leave myself.
Senator, thank you very much — Senator Menendez.
MENENDEZ: Take care, Neil. Bye-bye.
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