SHOW: Kudlow & Company 5:00 AM EST CNBC

April 13, 2005 Wednesday

LENGTH: 1803 words

HEADLINE: Former Senator Connie Mack discusses measures to change the US tax code

ANCHORS: LARRY KUDLOW

BODY:


LARRY KUDLOW, host:

Welcome back, everybody.

We're here now with more on tax freedom, this being April 15th, tax week, of course; freedom from this albatross of an anti-growth tax code. Really it's time to totally scrap the code and totally replace it with measures that'll put the capital back into capitalism like unlimited savings accounts or new tax rules for cap gains and dividends and estates. That, by the way, would eliminate the multiple taxation of saving.

So joining me now is the man who can actually do all this. Can you imagine meeting such a person? Former Senator Connie Mack, senior policy adviser and King & Spalding's Government Relations Practice Group and the chairman of the bipartisan advisory panel on tax reform, appointed by President Bush, and that's not the half of it 'cause he'd been a House member and a US senator for years and he knows all the tricks.

Now, Connie, I'm trying to rip this code apart. But I've been ripping pages out of this thing for three days, and I'm still in the table of contents, for heaven sakes. I haven't even gotten to the credits and the deductions. But, look, have you met...

Former Senator CONNIE MACK (Bush's Federal Tax Reform Panel Chairman): Well, wait a minute. Larry, let me just interrupt you for a second. Put all that in context, you know, the code today with its regulations is seven times longer than the Bible, it's greater than the entire works of Shakespeare. I mean, it's just an enormous mess.


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KUDLOW: See, that's important. I just want to dwell on this, 'cause there's a lot of nativist opposition to, you know, global trade and global movement of capital and labor. The reality is lower wages overseas is not our biggest problem because we're so much more productive here at home. Our productivity is way, way greater than theirs. But the differential in tax rates--or as, you know, tax subsidies, or let's call them tax costs--that's a killer. If we can eliminate that, then we wouldn't be worrying about jobs going overseas.

Mr. MACK: Well, I think you're exactly right. So, again, that's a message we've heard loud and clear. But we've got other problems on the individual side, too, Larry, as you know, and it has enormous cost to it. The alternative minimum tax is going to have to be addressed, and it does some incredible things. One of the stories I heard recently had to do with incentive stock options and the way the alternative minimum tax treats those. It's just fundamentally wrong and the cost of the AMT, as you know, is an enormous number. It's going to complicate the process that we have to go through. With all the things we'd like to get done and all the things we have to address, it's going to be a challenge, but I think we're up to it.


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April 13, 2005