Republican South Carolina debate: on Tax Reform

Fred Thompson: Tax cuts raise revenues; so much for the experts

GIULIANI: Well, the reality is that some tax cuts d add to revenues. Other tax cuts don’t add to revenues. It depends on the tax cut. If it is anti-competitive, you’re actually going to get more revenues from that tax cut.

THOMPSON: I need to defend Rudy a little bit on his tax plan, because it looks an awful lot like the one I put out a couple of months ago. The government never loses as much revenue as the experts say we’re going to. With the ‘01 and ‘03 tax cuts in place, we received more revenue into the government in one day in April of this year than ever before in the history of the country. So much for the experts, as far as that’s concerned. It does stimulate growth and it’s overall beneficial for the economy.

Ron Paul: Spending money doesn’t stimulate economy; reduced taxes do

A: Well, a government program is too vague. What kind of a government program? If it’s appropriating money and trying to stimulate that way and spend more money, no, that would be the wrong thing to do. But a government program of a reduced tax burden, yes, that would be. I believe we’re in a recession. Over-stimulation in an economy by artificially low interest rates by the Federal Reserve is the source of the recession.

Rudy Giuliani: Cutting anti-competitive taxes raises more revenue

A: Well, the reality is that some tax cuts do add to revenues. Other tax cuts don’t add to revenues. It depends on the tax cut. And tax cutting has been part of the Bush program, the Reagan program, the Kennedy program, and it always led to significan increase in economic activity. If you cut something like the corporate tax at 35%, you bring it down to 30%, you will get more revenues from that cut, because our corporate tax is the second highest in the world. If you cut some other tax, you might not get those kinds of revenues. So, the question is: What tax are you cutting? Is it anti-competitive? If it is anti-competitive, you’re actually going to get more revenues from that tax cut.