Former Regan economic adviser endorses Cruz's plan

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Former Regan economic adviser endorses Cruz's plan

Art Laffer weighs in on tax reform policies of GOP candidates on 'Your World'

This is a rush transcript from "Your World," January 15, 2016. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

SEN. TED CRUZ, R-TEXAS, PRESIDENTIAL CANDIDATE:  I would note that Art Laffer, Ronald Reagan`s chief economic adviser, has written publicly, that my simple flat tax is the best tax plan of any of the individuals on this stage cause it produces economic growth, it raises wages and it helps everyone from the very poorest to the very richest.

(END VIDEO CLIP)

NEIL CAVUTO, HOST:  And we verified that.  Art Laffer says that is true.  He likes the Texas senator`s plan the best.

And he is joining us right now, Art Laffer, of course, Reagan adviser extraordinaire, the man who was a big reason why we had those big old tax cuts and the booming bull market that followed.

Good to see you, sir.

ART LAFFER, FORMER WHITE HOUSE ECONOMIC ADVISER:  Good to see you, Neil.

CAVUTO:  All right.

Why his plan over some of these other plans?

LAFFER:  Well, some of them are very similar.

All of the candidates, every single one, has a good plan.  And they really do.  I love Donald Trump`s.  I think Rand Paul`s was great.  Ben Carson has got a terrific plan as well.  So -- and Jeb Bush.

CAVUTO:  What did you make of Rubio`s, because he still has really high...

(CROSSTALK)

LAFFER:  Yes.  His highest rate is way too much.  He has got high too many child tax credits and getting...

(CROSSTALK)

CAVUTO:  You don`t like it when it gets all weird.

LAFFER:  Well, but it`s not rewarding people for working.  It`s not -- tax codes should raise money.  If you want to help children, write them a check and give them a check and be transparent.  Write straight up about it.

CAVUTO:  OK.

LAFFER:  Don`t try to hide it in the tax codes and not do it that way.

CAVUTO:  And, by the way, he would keep the IRS going and all.  But the argument is that, whatever you use, you`re going to need some tax collecting body.

LAFFER:  You`re going to need someone to cash the checks.  Someone has got to cash the checks.

CAVUTO:  Yes.

LAFFER:  But, yes, but you can really reduce it dramatically.  You can eliminate almost all the audits, except for literally real cheats.

So, if you have got a flat low-rate, broad-based flat tax, where everyone pays the same rate, there`s no incentive for you to try to finagle where you pay your taxes, what type of income you have, capital gains or all that.  So it`s really neat, the way Ted Cruz has done it.

CAVUTO:  You know what I thought?  You and I have chatted about this.

The only way we can get big tax reform, obviously, is with a Republican coming in, with a Republican Congress.

I`m not casting political aspersions, but the two parties can`t settle their differences on this.  And, furthermore, with the president, whoever is elected, have to be elected by a big margin?

LAFFER:  I think so, but don`t discount the Democrats on this.  If you have a good president coming in who works with the Congress, in 1986, in our big tax reform bill...

CAVUTO:  You`re right.

LAFFER:  ... we got it -- 97-3, we passed the Senate.  Every Democrat voted for it, except for Simon, McClure, and Levin from Michigan.  Every other one did.

And Al Gore told me personally, he said it`s the best bill he passed -- voted for, it led to 25 years' worth of prosperity.  And he is right.

CAVUTO:  In other words, would that happen if a Hillary Clinton were elected and we had a Republican Congress?

(LAUGHTER)

LAFFER:  I don`t think Hillary will do it.

CAVUTO:  Right.

LAFFER:  But you wouldn`t have gotten any of the Democrats back then.

Mondale wouldn`t have done it either.  But with Reagan working with them and then making it clear -- they all saw that was a great tax bill.  And it was.

CAVUTO:  How long have you and I heard this, tax reform, tax reform, tax reform?  We saw the lower rates under Ronald Reagan, but all this sweeping stuff, it`s been like a generation.

LAFFER:  Since 1913, when the tax codes were put into effect.  That`s when it started.

CAVUTO:  Yes, right.

LAFFER:  At that time, can you believe it, 7 percent rate was the highest rate.  By 1919, they had raised that rate up to 77 percent.

CAVUTO:  Wow.

LAFFER:  It`s...

(CROSSTALK)

CAVUTO:  So you like Cruz`s plan.  Do you think he has a shot at this nomination?

LAFFER:  Oh, I think so.

And I think the other candidates` plans are really good, too.  I don`t want to dis any of the others, because I don`t.

CAVUTO:  Feel free.

LAFFER:  No, but what you are going to see happening is, this is going to go through a long process.

You have got a secretary of treasury, secretary of commerce, vice president.  You have got Council of Economic -- then you have got the House.  Then you have got the Senate.  Then you have got to conference.

And all of that...

(CROSSTALK)

CAVUTO:  But you were a big, influential guy.  I could see you like the George Lucas of economics.

LAFFER:  I would work on it.

CAVUTO:  Because -- no, because everyone wants your seal of approval, your blessing.  And you have given your blessing to Ted Cruz.

LAFFER:  Well, on the tax bill here, it`s pretty good.

CAVUTO:  OK.  All right.  Did you see the new "Star Wars" film?

LAFFER:  Yes, I did.

CAVUTO:  Terrific.

LAFFER:  I loved it.

CAVUTO:  You did?

LAFFER:  I loved it.

CAVUTO:  Dumbest movie I have ever seen.

LAFFER:  It was dumb, but I loved it.

(CROSSTALK)

LAFFER:  Just for me.

CAVUTO:  I miss Yoda.  You`re Yoda.

END

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