Sen. Cruz: Online sales tax would 'hammer' small businesses

This is a rush transcript from "Your World," May 6, 2013. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: All right, from out of line to online, first the online stuff.

The Senate is set to vote on a bill that makes it easier for states to collect sales taxes for online purchases. Senator Ted Cruz says it would be a job killer.

The Texas Republican with me right now.

Senator, very good to have you, as always.

SEN. TED CRUZ, R-TEXAS: Neil, it's great to be with you. Thank you for having me.

CAVUTO: Now, I read your column on this subject and what you warn could happen here, that it would be not only a job killer, but an economic killer. Explain.

CRUZ: Well, look, I think the top priority for every elected official, Republican or Democrat, should be restoring economic growth. Our economy is gasping for breath. And the idea that the Senate is today going to be voting to extend $23 billion in new taxes to small businesses and online retailers, I think it makes no sense at all. It will hammer small businesses.

If you're a small online retailer and this bill becomes law, you will be subject to the taxing jurisdictions of over 9,600 jurisdictions all over the country, subject to audits, having to file -- file returns potentially in 46 states, plus local counties and jurisdictions.

We need to be encouraging small businesses to grow, not hammering small businesses, especially on the Internet. The Internet has been such a haven for entrepreneurial opportunities. We shouldn't have politicians putting new taxes on the Internet.

CAVUTO: But, Senator, I'm sure aware it's a lot of those small businesses who themselves want this because they think that they're at a competitive disadvantage to the eBays and the Amazons because they have to make sure they pay these taxes, and those guys, while they're obligated to, don't.

CRUZ: Well, you know, it's interesting. The -- the talking points for the advocates of this bill, they press exactly what you're saying.

But -- but the people pushing for it are not the small local retailers. The people pushing it -- for it are the giant corporations, and it's why you're getting bipartisan support, because you have got the big box retailers, you have got the giant corporations, and then the really, really big online retailers are already paying sales taxes. And so you're getting this alliance of all the big companies, coming together saying, let's put this big regulatory burden on the small guys because it will drive our competition out of business.

Nine of the top 10 online retailers are already paying sales taxes in all 46 states that collect sales taxes, because they have physical presences in the states. So it doesn't impact the big guys. What this law would do is hammer small startups, mom and pops, people that are starting a company and their businesses going online and it would put crushing costs on them.

And so this is not about fairness. This is about big business getting in bed sadly with big government to make it harder for small businesses to survive, and to make it easier for politicians to -- to -- to tax and get more revenue. I think it makes no sense at all.

CAVUTO: If you don't mind my diverting a little bit from online to comments that even some of your critics say, Senator, were out of line on the part of our former Ambassador Bill Richardson, saying that you were not really Hispanic, that given your positions on how we happen illegal immigration and the like, despite your name, despite your background, despite all of that, you're not Hispanic? What do you think of that?


CRUZ: Well, I don't know Governor Richardson. He and I have not met. He is certainly entitled to his positions and his opinions.

In my view, if people are insulting you, if they're attacking your ethnicity, that tends to indicate that they don't actually want to engage in the substantive merits of the argument. And I certainly have no interest in getting into any sort of mudslinging battle on that front.

What we need to be talking about is the substance of the argument, and in particular we need to be focusing on economic growth that enables more and more people to climb the economic ladder and reach the American dream.

You know, Neil, 55 years ago my dad came from Cuba at age 18. He couldn't speak English. He had $100 sewn into his underwear, and that penniless immigrant washed dishes for 50 cents an hour, paid his way through school and was able to start a small business and work towards the American dream. And I think what the Hispanic community wants and what all Americans want is an economy and an environment where small businesses can prosper and where more and more people, where anybody can start with nothing and achieve anything. That's my focus, is expanding opportunity, not responding in kind to of whatever insults those on the other side may decide to hurl.

CAVUTO: All right. So when Governor Richardson was telling Shepard Smith in the last hour that he was just misinterpreted, no harm, no foul, or how do you stack it up?

CRUZ: He is entitled to his opinions.

My focus is on the substance of what works and matters. And, you know, Neil, I think most Americans don't care about petty political squabbles in Washington. What they care about is leaders in both parties who are willing to roll their sleeves up and fix the problems.

We got 23 million people out of work, and I think the idea that you have politicians squabbling and name-calling makes no sense at all. What we should be doing is getting the economy growing again. We need tax reform. We need regulatory reform. We need sound money. We need to address the problems that are impacting people's lives, because so many people are hurting right now, and in particular, economic mobility has been terrible under President Obama.

Young people, Hispanics, African-Americans, single moms have been hammered by the Obama economic agenda, and I think what the American people want is leaders who are serious about fixing those problems.

CAVUTO: Well, James Carville, of all people, was seriously impressed by you, Senator. I don't know whether you find that to be good or bad thing, but he said of you, "That guy, I'm telling you, he will out-debate -- I'm just saying he is a talent. I'm not rooting. I'm really sincere here. Now, I don't agree with him. I think he's out there, but I'm telling you he is more talented than any of those guys." If you were all in a room, talking about the prominent Republicans at a debate, he said you would "eat their lunch."

What did you think of that?

CRUZ: Well, those were very, very kind comments. I was certainly flattered.

I don't know Mr. Carville either, but I appreciated his kind comments. I will say in most other circles, saying that you're one of the better politicians is not much of a compliment in most of America.


CAVUTO: But I also think what he is saying is, unlike newly-elected senators, you are not quietly assuming membership in the club or being polite and genteel and don't rock the boat.

You have violated all of those, and many of your admirers say to your credit, but that you're going to deliberately rattle some cages and this is going lead to a presidential run in 2016. Is it?

CRUZ: Well, I will tell you, Neil, my focus is entirely on the U.S. Senate.

The Senate right now is the battleground. It is where we are fighting to defend liberty. I am spending every day fighting in the Senate to defend free market principles, to get the economy moving, to expand opportunity.


CAVUTO: But you yourself have said many in your party have been kind of mealy-mouthed on a lot of issues and you demanded that they be much more direct, much more in folks' faces. Is this part of that?

CRUZ: Well, it's interesting. I have found it amusing that people -- a number of people have criticized me on the grounds of civility and in particular have insulted me while doing so, and yet I have not and will not reciprocate. I am not interested in insulting anybody. I'm interested in doing the job the American people expect of us, working to fix the problems.

And so my focus is not on being civil or not. It's on the substance of the issues. Now, perhaps some in Washington think it is uncivil, for example, to oppose a $23 billion new sales tax on the Internet on the substance. Perhaps they think it's better to just go along with what so many others are doing. But I don't think the American people expect that of our leaders.

So my approach is to always endeavor to be polite and respectful to anyone I am dealing with, but at the same time to defend commonsense conservative principles that I think are the values that are held throughout America in both red states and blue states.

CAVUTO: Senator Ted Cruz, thank you.

CRUZ: Thank you, Neil.

CAVUTO: All right.

Remember what James Carville said about him. He's getting a lot of attention.

Content and Programming Copyright 2013 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2013 CQ-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.