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CNBC Kudlow & Company - Transcript


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CNBC Kudlow & Company - Transcript

MR. KUDLOW: All right. Joining us now with what I think is a better tax idea is Paul Ryan. He's the ranking member of the House Budget Committee of Wisconsin.

Paul Ryan, it's great to see you back. Charlie Rangel's story -- trillion dollars -- trillion-dollar Democratic plan -- I'm not sure America can survive that, Paul. You've got a better idea. Give us the quick bullets on your plan.

REP. RYAN: Sure. Well, I along with my colleagues, Jeb Hensarling, John Campbell and Michelle Bachmann of the Republican Study Committee, yesterday introduce an alternative to Charlie Rangel's mother of all tax bills -- a trillion-dollar tax hike. We do two things. We abolish the AMT, and we don't pretend to try and pay for it with another tax increase. We say no to this massive tax increase, and we swap it out for an alternative choice tax system. Which is if you want to pay your taxes on the individual IRS 1040 code like it is today, you can choose to do that. Or you can have an alternative, simplified tax system with two brackets -- 10 percent bracket and a 25 percent bracket. Ten percent on the first $100,000 of income for joint filers, 25 percent on everything there on after. We'd make the cap gains and dividend tax rates permanent at 15 percent. And there's very large, personal exemptions -- $25,000 exemption for joint filers, $3,500 personal exemption for there on after. So a family of four earning $39,000 would not pay taxes and then 10 percent there on after up to 100 percent then 25 percent.

What our plan does, Larry, is it's a flatter, simpler, fairer system.

MR. KUDLOW: Right. You get rid of --

REP. RYAN: No loopholes and deductions.

MR. KUDLOW: You get rid of all the flotsam and jetsam.

REP. RYAN: All of it.

MR. KUDLOW: For example --

REP. RYAN: That's right.

MR. KUDLOW: For example, the state and local tax deductions which drive me crazy and help create the alternative minimum tax problem in the first place. Get rid of that stuff, right?

REP. RYAN: That's right.

MR. KUDLOW: Your rates are going to be low enough and they'll kick in low enough, people won't need that other stuff.

REP. RYAN: That's right. And so we give taxpayers a choice. You know, I've been on the Ways and Means Committee for four terms now, and I got to tell you there's an army of special interest tax lawyers and lobbyists that fight for their little piece of the tax code. And I see that gauntlet in Congress, and that makes it tough to simplify the tax code. So we're bypassing all of that and giving each individual taxpayer a choice. What is in their best interest -- this code with all these things or this simplified code which is pro- growth and pro-entrepreneurial? And the key thing is this is revenue- neutral as well.

MR. KUDLOW: I think it's great stuff.

REP. RYAN: Without the AMT.

MR. KUDLOW: Have you talked to Charlie Rangel about it?

REP. RYAN: I haven't had time. We just introduced it yesterday.

MR. KUDLOW: Did you send him a note or, you know, like a pigeon, a little something saying this was coming?

REP. RYAN: (Laughs.) I sent something over to him. I'll see him on Monday, and we'll talk about it.

MR. KUDLOW: All right. Paul Ryan, this is a great plan, and I look forward to a lot more work on this as the days and weeks go on. Thanks very much for coming back on the program.

REP. RYAN: You bet.

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