Obama to veto extending tax cuts for those making over $250K

Small business owner Michael Fredrich speaks out


This is a rush transcript from "Your World," November 9, 2012. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": Fifty-two days, seven hours, and now counting. The fiscal cliff is coming, and so far all we're hearing is a lot of rhetoric here.

Harry Reid's jab of the day: "When Republicans talk about small business, they are really trying to protect billionaires like Donald Trump."

News to my next guest, who is a small business owner and says the Democrats have it all wrong.

Michael, what did you think of that?

MICHAEL FREDRICH, PRESIDENT AND OWNER, MCM COMPOSITES: I'm not surprised at anything that comes out of Harry Reid's mouth. I'm really not.

But stop with the class warfare. To me, Donald Trump is a man that should be admired. He's built a lot. He's done a lot of good. He's created jobs. And this vilifying successful people in this country is enough. I mean, I've had enough of it. And I have heard it through the whole election. And now I guess we're not done with it.

CAVUTO: You know, part of what I think the senator saying, what the president seems to be intimating is that this fear that raising the top rate again will hit small businesses will not, that it hits the -- only the top 3 percent.

I know, in reality, the administration doesn't tell you this; it affects 40 percent of the jobs. But leave that issue out. But they are trying to equate it with this is just something that would affect Donald Trump and not like guys like you. What do you say to that?

FREDRICH: That's nuts.

I've heard this. And we can keep repeating it, that the majority of the small business owners pay their taxes and the company's earnings flow through to their personal tax return. So if our company makes $500,000, I get $500,000 worth of income on my tax return, which doesn't mean I get $500,000 worth of cash. I don't get any cash.

But yet I have to pay the income tax on $500,000. So I have to decapitalize our country -- or our company, rather, and take the money out so I can pay the taxes. But it affects every small business owner. And, as you know, Neil, we provide the majority of the jobs in this country.

CAVUTO: Now, do you think real quickly that the way around this is to just keep the tax rates where they are, let them hash this out in the new year by either extending those rates and then getting a simplified tax code, or what?

FREDRICH: Well, they're going to say we have a revenue issue.

CAVUTO: Right.

FREDRICH: And my answer to that is very simple.

You look back over the last 100 years of this country, and every time we've lowered the tax rates, we have increased tax revenue. Why is that not on the table? President Kennedy did it. President Reagan did it. President Bush did it. Every time, every time, Neil, tax income goes up. You raise the tax rates; you will have lower revenue, not higher revenue.

CAVUTO: Well, it always happens that way. These little rascals in Washington then spend all that revenue and they want morning of it.

But you're quite right, Michael. You're quite right.

Very good having you, sir. We will see how it works out.

FREDRICH: OK, Neil. Thanks a lot.

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