This is a rush transcript from "Your World," January 31, 2012. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST OF “YOUR WORLD”: Well, the Dow just finished its best January on record, at least on a point basis. Percentage-wise, it is the best gain we’ve seen in about 15 years, the Dow climbing more than 3 percent for the month.
By the way, that would make the fourth straight monthly gain. So all of this hand-wringing notwithstanding, between that and an 8 percent gain in the NASDAQ, a lot of folks are saying the market could be telegraphing good times are ahead.
But is all of this about to change if the president pushes through tax hikes?
South Carolina Democratic Congressman James Clyburn isn’t too concerned. He joins me right now.
Congressman, you do not think these tax hikes or talk of them would kind of upset the apple cart?
REP. JAMES CLYBURN, D-S.C.: Well, it all depends on which hike you are talking about.
If you are talking about letting the Bush tax cuts expire, as currently scheduled to do, I don’t think it’s a big deal. If you are talking about 160 million people not allowing those tax cuts to go forward, that is a big deal.
CAVUTO: So, you’re saying for the tax cuts -- or the tax rates that are supposed to expire at the end of this year for the upper income, you would let them expire, not for the others?
CLYBURN: Yes, sir, absolutely, but not the 160 million who we are trying to get a tax cut for now, because these are the consumers, Neil. And you know that.
These people, when they save this $1,000 or $2,000 per household, that money gets plowed back into the economy; it allows for jobs to be created. And it makes for a much better flow within our economy. Those people at the high end, we know what happens with that money.
It goes into their portfolios, and it may not ever get into the economy the way it needs.
CAVUTO: First of all, Congressman, what they do with their money is their business, right? But leaving that aside...
CLYBURN: I’m not saying -- it is their business.
CAVUTO: I understand, sir, but you see what I mean? Like, there’s a propensity on the part of Democrats -- not all, and maybe not you all the time -- but to look at further raising taxes than ever cutting spending.
CLYBURN: Well, we did cut spending, $957 billion in the last cut.
CAVUTO: That was barely a rounding error, over the next 10 years, barely a rounding error.
CLYBURN: Well, it may be, but the fact of the matter is, don’t say we didn’t cut.
CAVUTO: Well, you didn’t, you slowed the growth. You slowed the growth by 900 some odd billion, right? That’s not a cut.
CLYBURN: That’s been the definition of a cut for as long as I have been in government. This is my 20th year here. And it is always those who are doing it say we are cutting and those who are against it says you are cutting the growth in spending.
CAVUTO: Fair enough.
CAVUTO: But you just heard we had another $1 trillion-plus deficit fourth year running. Do you think it’s time people get serious about big spending cuts before they start talking about any sort of a tax hike?
CLYBURN: Yes, we should get serious about big spending cuts.
And we also should get serious about big revenue raisers. We know that our tax code is crying out for reform. Let’s reform the tax code. Let’s make sure that everybody has the same benefit, everybody playing by the same rules so that everybody can be part of this growth going forward.
CAVUTO: Does that include, sir, the nearly half of all households that pay no income tax right now? Would it be fair that they put some skin in the game?
CLYBURN: Well, when you don’t not pay any income tax, that means you aren’t making any income.
CAVUTO: That is actually not true. A lot of these people are paying Social Security or Medicare or what have you. But I can understand maybe a few percent not being able to pay anything, and that’s fine, but 46 percent?
CLYBURN: And that’s why Richard Nixon and the Republicans in the past gave us the earned income tax credit.
CAVUTO: I know, but we’re up to 46 percent not paying any income tax.
CLYBURN: So what?
CAVUTO: That’s pretty big.
CAVUTO: So what? That is a big deal.
CLYBURN: No, they’re contributing to the economic growth in the country.
CAVUTO: Yes, but they have no skin in the game when it comes to correcting our tax code or addressing it. I understand what you’re saying, sir, about fairness, and maybe the rich should pay more, and maybe you are right. But I wonder about the half paying no income taxes at all. Is that fair?
CLYBURN: Well, it is fair if they don’t have sufficient income to pay taxes.
Why should we say to people who making almost no income, got children to feed, making $20,000 a year, you need to put some skin in the game?
CAVUTO: Well, they are not. You have a lot of them are making more than $50,000.
CAVUTO: I am not saying they are all sponging off the system. I’m not saying that.
CLYBURN: Yes, you are.
CAVUTO: No, I’m not. No, I’m not.
I’m telling you that statistics from the IRS, when 46 percent are not paying income tax -- again, I’m not saying – you’re paying Social Security, you’re paying Medicare. It’s not as if you are getting away scot-free, but you are not part of this income tax-producing nation.
And pointing fingers at the rich, who are, you are only further heightening this, I don’t know this angst between the classes, right?
CLYBURN: Let’s stop denigrating poor people.
CAVUTO: I’m not denigrating poor people. But 46 percent, they can’t all be poor people.
CLYBURN: And if 46 percent of the people are only making $20,000 a year or less, then we ought to do something about that.
And those are the people who are not paying any income tax. And I don’t want them to pay an income tax. And I don’t mind paying a little more on their behalf. And I think that the people who make $20 million a year and paying no income tax or paying 14 percent, as is happening -- there’s one presidential candidate who made $21 million doing no work at all, no...
CAVUTO: Well, he paid taxes on that money when he had...
CAVUTO: And then the money that he reinvested, he’s paying capital gains. He’s not cheating anyone. There is a capital gains rate. And he’s paying that capital gains rate. It’s not as if he is dodging the tax man, right?
CLYBURN: Well, he may be dodging. We don’t know, because he got the money over in the Cayman Islands and other places outside of the country and won’t let us see it.
He may be dodging. If he’s not dodging, expose it all, let us see it. I got a good feeling in my gut...
CAVUTO: You just implied, though, Congressman -- maybe with the best of intentions -- to say that Mitt Romney is getting away paying a rate that might not be right, when in fact he is paying a capital gains rate on money that he has already paid the highest rate on.
He took that money, that capital, reinvested it. That money then makes money. Its capital that has a gain, hence capital gains. It is taxed at a different rate, 15 percent, but it’s not as if he has masterminded a highway robbery here, right?
CLYBURN: No, it’s not a highway robbery, by any means, but it’s an unfair tax code.
He did pay taxes on the principal. But the principal is now gaining additional income off the interest. And he is paying a much less rate on the money he’s made off of money.
CAVUTO: But that kind of money taxed at that rate, Congressman, compels those who want to invest in startup enterprises or turn companies around and risk their capital, they’ll risk it when there’s a rate of 15 percent; they might not if it is 30 percent or 40 percent or 50 percent. Right?
CLYBURN: Granted. And that’s a fair assessment of it.
But you never know when the money’s parked offshore. If the money is in the Cayman Islands, in a Swiss bank account, we have no idea, now, do we? Now, you can tell all kinds of stuff about how this man, how he made his money and what he has done with it, and maybe you have got some secret insight into the Swiss bank account or the Cayman Islands account.
I don’t, and I don’t know of anyone else who may have that kind of access, so...
CAVUTO: If he gives $4 million to clarity, if he gives a lot of money to a variety of causes, whatever, you are questioning where he has his money.
That money eventually has to come back home taxed at the rates they are in the United States. None of that makes a difference to you? He is terrifically evil because it is somewhere else?
CLYBURN: Well, I would prefer that we all play by the same rules in this country. I’ve never given $3 million in a year, but that little -- $1.7 million, my wife and I gave to our alma mater down there in South Carolina, if we were to use the assessment of the widow’s mite, it is much, much more money than the president -- or president -- candidate Romney has given.
CAVUTO: You called him President Romney, didn’t you?
CLYBURN: I said president -- sorry -- candidate Romney.
CAVUTO: I’m kidding. I’m kidding.
Congressman, always a pleasure, sir. Thank you very, very much.
CLYBURN: Thank you so much for having me.
Content and Programming Copyright 2012 Fox News Network, Inc. Copyright CQ-2012 Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.