Transcript: End to Income Tax?

This is a partial transcript from "Your World with Neil Cavuto," October 19, 2005, that was edited for clarity.

STUART VARNEY, GUEST HOST: Talk of a major tax overhaul in Washington causing some major controversy. A presidential advisory panel is recommending ways to simplify the tax code by cutting some popular tax breaks for Americans.

My next guest is not happy about it. And he says he has got a much better plan of his own.

Joining me now is Jim DeMint. He's the Republican senator from South Carolina.

Senator, welcome to the program.

SEN. JIM DEMINT, R-S.C.: Thank you, Stuart. It's great to be with you.

VARNEY: First of all, I'm going to briefly outline your plan, if I may. You say, no more income taxes, an 8.5 percent sales consumption tax, no more business income taxes, just 8.5 percent profit tax. And the poor get a rebate for the sales taxes they pay. That's it. That's your plan, isn't it?

DEMINT: Exactly.

We call it the 8.5 percent plan. And I have got this brochure because we're promoting it to other senators today.

We need some boldness, Stuart. Our country is falling behind in a global market, our tax code, one of the biggest reasons that that's happening. And we need to pull this code up by its roots and replace it with something that's simple and fair and gives America a competitive advantage.

VARNEY: Senator, forgive me for being blunt, but a flat tax rate, whether it's consumption or income taxes, hasn't got a prayer. It's so against America's political culture.

DEMINT: Not with the rebate at all.

Every American will get a rebate up to the poverty level. The poor are basically not paying any taxes. We have actually set up a matching savings program for the poor. This would do more for poor and middle-class Americans than anything we have considered before, because it encourages savings. It helps them to build wealth. And we just need to think a little bigger than nibbling around the edges of this current tax code.

VARNEY: But do you think the Republicans have the political strength in Congress at the moment to push through what is truly a radical tax plan like yours?

DEMINT: Well, the strength of the Republican Party is bigger ideas, things like turning Social Security into the nation's biggest savings program, or a tax code that makes us competitive as a nation and encourages savings, ideas like health savings accounts. This is what the Republican Party all about. And if we want to regain our strength, we need to go forward with these big ideas.

VARNEY: The president's advisory council has come up with a couple of different options here, one of which would do away with the mortgage interest deduction. I take it you don't think much of that.

DEMINT: Well, again, this is just nibbling around the edges. That's basically a tax hike for some levels of income.

And, I mean, there are some good things in their proposal. I appreciate their work. But it basically takes the same code we have, changes it a little bit. But it doesn't do anything to help keep jobs in America, to attract capital to America. We need to rip this code up by its roots and replace it with something that's fair and simple.

VARNEY: Senator, I think there are a lot of people in our audience cheering you on. But thanks for joining us.

DEMINT: Well, I hope so.

VARNEY: Senator Jim DeMint, thank you sir.

DEMINT: Eight-and-a-half percent, Stuart.

(LAUGHTER)

VARNEY: You got it.

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