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On Taxes – In Their Own Words
Fifth Republican Debate
September 5, 2007
University of New Hampshire
Fox News Channel

WALLACE: Good. Mayor Giuliani, I'd like you, first of all, to respond to Senator McCain's comments that for all you did in New York on 9/11, it doesn't translate into national security experience.
And also, last May, when I asked you why you have never been to Iraq you said you would like to go by the end of this year. Are you in fact going to make that deadline?

GIULIANI: I turned over a city that where we had reduced taxes 23 times. I turned over a government that George Will said was the most conservative government of anyone in the last 50 years. And I turned over a city where people had hope that hadn't had hope before.

WALLACE: As you all well know, pledges not to raise income taxes are a big deal here in New Hampshire. Six of you on this stage... (APPLAUSE) Six of you on this stage have signed the pledge of the Americans for Tax Reform to oppose any increase in marginal tax rates, while two of you have not. Senator McCain, why have you refused to sign and why do you feel that six of your seven colleagues here on the stage are mistaken in deciding to take that pledge?

MCCAIN: Because I stand on my record. And my record is 24 years of opposing tax increases. And I opposed them and I'll continue to oppose them. I think it's very clear that the increase in revenue that we've experienced is directly related to the tax cuts that were enacted and they need to be made permanent, rather than the family budgets and businesses being uncertain about their future. But my proposal in 2000 and 2001 was not just to cut taxes but to stop spending.

MCCAIN: And we let spending get out of control. We destroyed the trust and confidence of our Republican base of fiscal conservatives. We allowed spending to get out of control to the point where it bred corruption. And I don't say that word lightly. We have former members of Congress in federal prison as we speak. I pledge to the American people, I will veto every pork barrel bill that comes across my desk. And I will make the authors of those pork barrel projects famous, and that's what I've been doing for a lot of years. (APPLAUSE)

WALLACE: Senator McCain, if I can follow up the 30 seconds. Those tax cuts that you talk about that have given so much revenue -- in fact, you voted against those -- and why not, if you are determined to not raise taxes, why not sign the pledge?

MCCAIN: Because there's no point. I stand on my record. I don't have to sign pledges.

MCCAIN: My record stands for itself. It's very clear to the American people. I've been in this business for a long, long time. But the point is that I voted against the tax cuts because there was no restraint in spending.We had automatic restraints in spending included in my tax-cut package, and we would be talking about additional tax cuts today if we hadn't let spending get out of control and preside over the largest increase in the size of government since the Great Society. Not a record we should be proud of.

WALLACE: Senator Brownback, are you persuaded by Senator McCain's argument against taking the pledge not to increase marginal tax rates?

BROWNBACK: Well, he has his own record. He stands on his own record. I think he should sign a pledge. That's why I signed the pledge. I think it's not just a pledge to a group that has it. I think it's a pledge to the American public. We're already taxed to the max. In most states, you're working until about the middle of May to pay your taxes. It is too long. You're working too much for the government, and you need to be working more for yourself.

BROWNBACK: And I've pushed these topics based on I think we need to grow the economy, plus I'd like to be able to see families keep more of their money so that possibly maybe one of them doesn't have to go to work instead of both having to go to work, if more families could keep more of their money instead of it going to the government.

WALLACE: Mayor Giuliani, you say that you were a big tax-cutter in New York, but you did raise fees and fines and, in fact, you even went to court to fight elimination of the commuter tax. Why -- and you're the other person in addition to John McCain -- why not take the Americans for Tax Reform Pledge not to increase marginal rates, sir?

GIULIANI: It's a matter of principle. I think if you're president of the United States, you take one pledge: to uphold the Constitution of the United States.

GIULIANI: It is my intention to lower taxes. I have without any doubt of all the people running for president the strongest record of lowering taxes. I did it 23 times in a city that never lowered a tax before. Well over $9 billion. I lowered the personal income tax 25 percent, and I was collecting 40 percent more in revenues from the lower tax than the higher tax. I made supply-side economics work in a city that didn't understand it. And I ended up having a very positive impact on the economy of the city as the result of that. I lowered 23 different taxes in a city that had a city council with 45 Democrats and six Republicans. So my record is very, very strong as a tax cutter. But I only think a man running or a woman running for president should take one pledge, and that is to uphold the Constitution of the United States.

WALLACE: Governor Romney, you have taken the pledge.

WALLACE: You like to say that you don't just talk about pledges, that, in fact, you actually had to operate one as government of Massachusetts. But according to the National Conference of State Legislatures, in your first year as governor, you raised fees and fines by $500 million, including fees paid by the blind, by gun owners, by those seeking training against domestic violence, and even by used car shoppers. In fact, the Associated Press says you earned a nickname back then in Massachusetts. It was "Fee-fee". (LAUGHTER) How do you respond, sir?

ROMNEY: Well, that's the first I've ever heard that, Chris, but it's pretty good -- as a matter of fact, a little exaggeration. The total fees raised were $260 million, and that's a big number.
We had a $3 billion budget gap. The Democrats -- you probably know that Massachusetts is a bit of a Democratic state --the Democrats wanted to raise taxes. I said, "No way." And in fact we did not raise taxes on our citizens, and we lowered them across that state time and again. We put an investment tax credit permanently in place. We provided help to senior citizens on real estate taxes. We changed the capital gains tax increase to a capital gains tax refund.

ROMNEY: I'm proud of what we were able to do to lower taxes. I'm also going to lower taxes for the American people, and that's the key thing. Right now, you can listen to the Democrats. Their pledge is clear. They're going to raise taxes. I want to lower them. Make the Bush tax cuts permanent. Kill the death tax once and for all. (APPLAUSE) And a savings plan -- a savings plan for middle income Americans. If you earn less than $200,000 a year, the new tax rate on interest, dividends and capital gains ought to be absolutely zero. And by the way... (APPLAUSE)
... John Edwards has his own savings plan for the middle class. He says you can save $250 a year tax-free. Whoopty-doo. That's not going to buy you retirement, it's not going to buy you a house, and someone yelled out it's not going to buy him a haircut, either. (APPLAUSE)

WALLACE: Governor Huckabee, you may be the biggest supporter of the FairTax on this stage, that you say replace the income tax with a 23 percent national sales tax.

WALLACE: Now, back in 2005, President Bush's tax reform commission did a study about the FairTax. They said the sales tax rate would have to be 34 percent, not 23 percent, and that no state, no country, has ever put in a 34 percent sales tax. How do you respond to that and also the fact that President Bush's tax commission says that with a FairTax that high, there are only two income groups that would benefit -- those making less than $30,000 a year and those making more than $200,000?

HUCKABEE: Well, Chris, the first problem is that the Bush tax panel did not look at the FairTax proposal. They looked at something that called itself that, but it was not. The true FairTax proposal is the 23 percent. And what it does do is empower everyone in the economy, not just the people at the bottom and the very top, but all of the middle class, which is a desperate need.
It's pretty sad right now that the average American is more afraid of an IRS audit than getting mugged.

HUCKABEE: But that's the truth, and the reason is because the IRS has the power not just to come after us for a few seconds, but to keep coming after us. What we would do with the fair tax is to eliminate all the taxes on productivity, which means you could earn anything you want. You wouldn't be penalized for saving, earning, for having a capital gain, making an investment.
What you what do is you'd pay a tax when you consume something, and it ends the underground economy of illegals, prostitutes, drug dealers. Everybody has to pay.
And if people would look at this objectively, they'd find that it's the best way to get rid of the corruption in government because it eliminates those 35,000 lobbyists out there trying to make winners and losers. And most of us end up being losers in the process.

WALLACE: Congressman Paul, your answer is to cut both taxes and spending. You say that you would eliminate the IRS, the CIA, the Federal Reserve, the Department of Homeland Security, Medicare.

WALLACE: I know that you used to want to end the FBI. I'm not sure whether you still support that idea, sir. Perhaps you can tell us. But if you get rid of the CIA, let alone the FBI, how would President Paul have any idea, any intelligence of what our enemies, foreign and domestic, are up to?

PAUL: Well, you might ask a better question. Before 9/11, we were spending $40 billion a year, and the FBI was producing numerous information about people being trained on airplanes, to fly them but not land them. And they totally ignored them. So it's the inefficiency of the bureaucracy that is the problem. So, increasing this with the Department of Homeland Security and spending more money doesn't absolve us of the problem. Yes, we have every right in the world to know something about intelligence gathering. But we have to have intelligent people interpreting this information. (APPLAUSE)

PAUL: But you know, just going for increasing presidential powers, as has been discussed, is rather disturbing to me. This whole idea that we're supposed to sacrifice liberty for security, we're advised against that. Don't we remember that when you sacrifice liberty for security, you lose both? That's what's happening in this country today. (APPLAUSE)

PAUL: We have -- we have a national ID card on our doorsteps, it is being implemented right now. We have FISA courts. We have warrantless searches. We've lost habeas corpus. We've had secret prisons around the world and we have torture going on. That's un-American, and we need to use the power of the presidency to get it back in order, in order to take care of us and protect this country and our liberties