Larry Kudlow Interviews Mayor Giuliani

Excerpts from CNBC’s “Kudlow and Company”

MayorGiuliani: “I regard myself as a supply-sider for sure. … [I]tworks.”

KUDLOW: “I want to ask you, do you regard yourself as a free market capitalist? Do you regard yourself as a supply-sider?”

GIULIANI: “I regard myself as a supply-sider for sure. I mean, watched Ronald Reagan do it and learned it, saw it work. Taxes get reduced, more revenue come in. Practiced it as the mayor of New York. I'm the first mayor ever to do that. It's almost harder to do in New York than it is in Washington. There was less of an acceptance for it and more resistance to it. But I have lowered taxes 22, 23 times. I started with a $2.3 billion deficit and by lowering taxes, we cleared that deficit and we started building a pretty big surplus. So not only do I believe in it, I've made it work. So I believe in it really strongly because it comes out of practical experience. Free market, more and more so. I've said over the last 10 to 15 years I've become more and more convinced that globalization, free market economics is the way to go for the United States.”

Mr. GIULIANI: “I've always been in favor of a low capital-gains tax. In fact, as mayor of New York, I used to try to urge--actually removing the capital-gains tax. I thought it would be one of the best special benefits for New York. I couldn't quite get the Congressional delegation to agree with that. But the idea of you lower the capital-gains tax and if you do it smartly, you're going to end up with more revenues from the lower tax than you do from the higher tax. So I do think that if you look at my background and you look at my experience as mayor, I probably have the most aggressive, fiscal conservative record, supply side record. I'm probably the only one that's really practiced it.”

KUDLOW: “Some in Congress, speaking of tax hikes, some in Congress are talking about taxing these private equity funds, which many believe have made business more efficient. They want to tax the so-called carried interest. Do you have a thought on that?”

Mr. GIULIANI: “My thought would be an intuitive thought, not well studied or deeply knowledgeable, would be I'm against most taxes. I think that taxes have to exist. They should exist at the lowest possible level and to the extent that we can, we shouldn't invent more. Maybe that's my experience being mayor of New York City, where we had so many taxes. I mean, think about it, I made 23 different taxes. And I'm not sure I made all of them. I mean, the city shouldn't have 23 taxes or 30 taxes or 40 taxes. There should be a few. They should be simple. They should be easy to comply with. They should raise the revenue that's most for the essential services of government and they should be competitive. Whenever the people talk about a new tax, I generally don't like the idea.

“ KUDLOW: “How would a President Giuliani reform the tax code?”

Mr. GIULIANI: “I think it needs a massive simplification. If we were doing income tax for the first time. In other words, if we were starting off new back at the beginning of the last century, then probably we should go with a--we probably should've gone with a flat tax, maybe two levels of tax, but really simple. Our economy has kind of grown up now on depreciation and deductions and industries have grown up around that and so I don't know exactly how much you can simplify it, but you sure have to make a stab at it. And I think Reagan got it right. I felt that what Reagan did was, I kind of think of it as like cleaning out the forest. You got--the tax code was this big, he got it down to a simple code, reduced the top rates. Kind of leveled out the rates a little so there weren't as many. The tax code needs a simplification in addition to lowering your sum taxes. Another tax that has to be dealt with is the death tax. That's a double tax. People get it twice and it has a major impact on lots of people who aren't really wealthy. They are people who have their money in land or they have they money in real estate or they have they have their money in the family business or the family farm and they've got to sell the darn thing or they get in a big dispute with the IRS about what it's worth on paper.”

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