May 12, 2003 Monday
HEADLINE: Explosions Heard in Riyadh Housing Compounds
SEN. MITCH MCCONNELL ®, KENTUCKY: Good to be back with you, Lou.
DOBBS: Senator, the president pushing hard for this proposal. Senator Grassley has moved out of committee a somewhat more modest version than the House certainly and far more modest than what the president wants. What can we expect?
MCCONNELL: Well, it's a little more modest than a number of us wanted but we're going to try to form it in a way on the Senate floor even if it's a lower amount than in the House in a way that puts some real juice into the effort to create new jobs and new growth for the American people, and that debate, Lou, is going to occur here in the Senate this very week.
DOBBS: The tax cut itself when do you think you could actually see this tax cut become law?
MCCONNELL: It could be before Memorial Day. We intend to pass the bill in the Senate this week. The House acted last Friday. We expect an early conference between the House and Senate next week and a vote on the conference report before Memorial Day. So, the relief is on the way and we want to do it and we want to do it now.
DOBBS: Senator Grassley has also proposed an interesting idea that is phasing in, if you will, and certainly scaling back dividend taxes to the level of $500. What do you think of that idea yourself?
MCCONNELL: I don't like it. We're going to try to make that better. We think there ought to be close to a complete dividend exclusion to the taxpayer and even if we can't under our overall framework that we've got to operate within make that a permanent one, we'd like to get the maximum amount of relief on the double taxation of dividends and get it, Lou, quickly.
DOBBS: Are you amongst those who subscribe to the idea that the stock market will rally as a result of this elimination of taxation on dividends?
MCCONNELL: Yes, we think so. I mean it increases the value of stock and over 50 percent of Americans are in the stock market now. They watch their IRAs and their 401(k)s. They're not happy about what they see over the last three years. We think this could really begin a rally in the stock market, which would certainly help get this tepid growth rate that we've got going on in the country right now up to a level that creates new jobs and opportunity for our people.
DOBS: Well, you know, as you say it would be helpful certainly to those stocks that pay a dividend, but as you well know most stocks don't pay a dividend, and there's a great question amongst economists as to whether or not the impact of this tax cut could have a significant impact, a significant effect over the course of the next 12 to 16 to 18 months, that is Election Day 2004. What do you think?
MCCONNELL: Well, I mean the reason a lot of companies don't pay dividends is because of the tax treatment of it. Dividends are taxed twice, one to the company and the second time to the shareholder.
We think that by eliminating this unfair double taxation of dividends you no doubt raise the value of stock and you enhance the sense among corporate executives that they ought to pay dividends.
So, we think it will completely change the corporate culture, be good for the stock market, and of course so much of what we feel about our economy is based upon what we see in the market. So, we think this is the single most important thing we could do to jumpstart our economy, get the kind of growth rate that we ought to have and the kind of employment figures that we ought to have.
DOBBS: Job creation let me pose the question to you. If we're going to create jobs here and it's obviously been a jobless recovery. We've lost more than two million jobs why not go straight at it? Why not a targeted investment tax credit, specific incentives to corporate America, small business in particular, an infrastructure program?
MCCONNELL: Well, there are some expensing provisions in this bill that we think are going to be a boon to small business.
MCCONNELL: And also by advancing the reduction in the top income tax rate, which we passed in '01 but over a period of years by advancing that we catch the vast majority of small businesses, Lou, that pay taxes as individuals not as corporations.
MCCONNELL: So, we think in two important ways this package is going to help small business and help job creation.
DOBBS: Senator Mitch McConnell, as always, it is good to talk with you.
MCCONNELL: Thank you, Lou.
DOBBS: Thanks for being here.