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This is a partial transcript from "Your World with Neil Cavuto," January 11, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Also making a big splash — how is this for transitions — H&R Block, the tax preparer, is offering its customers not swimsuit models but tax deductions if they donate money to a number of charitable causes, including those for the tsunami.

With us now Mark Ernst. Mark is the chairman and CEO Of H&R Block, celebrating its 50th anniversary of serving clients.

Good to have you, sir.

MARK ERNST, CHAIRMAN/CEO, H&R BLOCK (HRB): It's great to be here.

CAVUTO: So you're into this tsunami thing. We were mentioning during the break here that the president is allowing those who donated tsunami relief up until the 31st of this month to write it off the 2004 taxes. That's right.

ERNST: I think it's a brilliant idea. This is the time when people can actually most get a tax benefit, but also do good at the same time. So, I think it's a great move on the part of the president and the Congress. I just hope enough people hear about it in time to make a difference.

CAVUTO: All right. So people write that off on their 2004 taxes. Is it going to make a big difference, though, in the scheme of things, as far as the tax season goes?

ERNST: Well, as far as the tax season goes, probably not, but certainly, it's going to help a lot of people understand that there are deductions. There are credits. There's a variety of things that they can take advantage of to lower their tax bill.

And the government wants to help them do good in situations like this, and this is just another example of it.

So, we think it's going to, you know, help a lot of people remember that there's all kinds of things that they might not want to forget when it comes to tax time.

CAVUTO: Like what?

ERNST: Beyond the, you know, the tsunami write off itself, there are all of the deductions from last year, all the various itemized deductions that people have.

CAVUTO: What if people make the biggest mistake, when they take the standard deduction? Should most people avoid that?

ERNST: Well, it depends. That's the problem. Most people, the biggest mistake they make is they don't try to determine whether or not they can benefit from itemizing. It looks like too much work. They'll just take the standard deduction. They'll take whatever the IRS gives them, when in fact, they're entitled to a lot more. And people are just afraid to either...

CAVUTO: What do they overlook?

ERNST: They often overlook the fact that, you know, if you've had medical costs during the year. You may have a fairly big bill...

CAVUTO: But that's got to exceed 7.5 percent of your gross.

ERNST: It does. But by the time you add up all the different things that people are entitled to, they often don't understand.

The other thing that we know that people miss all the time is if you give things to charity, you know, you give clothing, and that sort of a thing to your local — your local school, fund-raiser, you get to write that off. Most people don't know how to value that, and that stuff is really worth an awful lot more than people realize.

CAVUTO: Do most Americans end up getting refunds?

ERNST: Yes, about 85 percent of the U.S. population gets a refund. And part of the reason why people like — you know, most people think about tax time as kind of a negative time of year, besides us. There's an awful lot of people who are pretty happy about this time of the year, because most people are getting a tax refund.

CAVUTO: That tells me they're having too much withheld during the course of the year.

ERNST: Yes, I think there's an awful lot of people. We see this all the time. People see this as a way of — a forced way of savings. And while they may be forgoing a little bit of interest income, what they're really doing is they're disciplining themselves so that this time of year when all those holiday bills start coming in, they've got the money to pay them.

CAVUTO: I was thinking of you, Mark, when you were coming here, that the government now wants to simplify the tax code. Wouldn't that hurt people like you?

ERNST: Well, I'll tell you, you know, there are three things that are certain in life: death, taxes and the ever — never-ending quest for a simple tax system. And I don't think that quest will ever end.

CAVUTO: If it does, is it bad news for H&R Block? Let's say you could write them all off on an index card?

ERNST: Well, in my opinion, we will never get to a system like that. And the reason we never will never get to a system like that is because it will be very unfair system, if that's the kind of system that you have.

And the reason we have so many deductions, so many credits, so many different write offs is because there's been this quest to make it more fair, to give incentives to people to do certain things, not other things, and all of those have very good intentions behind them, and...

CAVUTO: But we have made it a mess, right? I mean, I know we have mortgage interest, charitable deductions, all of that, to say nothing of things that encourage investment, those things that discourage investment.

If we made it a flat tax and everyone paid a set percentage, it, would be progressive in and of itself, right? Because the percentage on higher income, more people would be paying more money, anyway, right?

ERNST: That's right. But again...

CAVUTO: You're not buying it?

ERNST: I'm not believing it. We've already heard the president say, you know, we want tax reform, but — but a couple of things are off the table: mortgage deduction and charitable contributions. Already...

CAVUTO: They've already started. All right. Mark Ernst is the name. He's the chairman and the president and CEO of H&R Block, celebrating 50 years. You're a young guy.

ERNST: Closing in on the 50 years.

CAVUTO: Feeling like it.

ERNST: Feels like it.

CAVUTO: All right. Thank you very much.

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