You are the man on taxes. And let me ask you going all the way back to 1985 when I look at the percentage of federal revenues
as a percentage of GDP. Throughout that period time it has not gone up even from the days of Ronald Reagan. Have you succeeded.
Should you declare victory. Yes in the sense that the goal is to have the government take less of people's resources and allow
them to have more freedom and more liberty and to have businesses invest based on what's a good investment not what tax
policies are. So I'm happy that we've stopped a lot. We've taken the rates down dramatically. Remember top rate was 70 percent
when Reagan walked in the door. It got down as low as 28 percent. Unfortunately Bush let that back up. But there's more
to be done at the national level. The reduction of the corporate income tax that the Republicans did in 2017 made us more
competitive with China. The danger with the tax increase. One of the tax increases that Biden is looking at taking the top rate
to 28 corporate rate the corporate that would put it up higher than China higher than anyone we compete with in Europe. When we
were at 21 we were much more competitive. We are 21 now. But if we go back up to 28 and you have to add. Most states have a
state corporate income tax. We become very uncompetitive with China Japan Europe as you know better than I. It's not just the
marginal rate that counts. It's the total tax burden. And if you look at see these countries in fact they have V A T taxes other
taxes they pay. And there's a Peterson Institute study that actually says we're at the bottom of the pack when it comes to
these countries the competitors. What do you say about those numbers. Well we have less spend less taxation as a percentage
of our income as a percentage of our assets which is good. That's why we've historically grown faster than Europe. That's
why where the GDP is stronger in the United States per capita than that other places.
The value added tax that they have in Europe is how they got government bigger. There's a certain point at which you can't
get any more blood out of the turnip with individual tax rates both on companies and on individuals. We're probably above that
point now but the Europeans have decided you can increase the size of the government with a value added tax which is in some
cases twenty one twenty five percent. In Europe it's a sales tax at all levels of production. And that's one of the ideas that
some in America have. Why don't we have a carbon tax which would then become the VAT tax. Then we'd look like Europe. And I guess
my argument is if you want to see innovation growth job creation you don't want to look like Europe.
Is there a right number for the percentage of GDP that should be tax. I mean there's something called houses law that I've read
about that says basically no matter what the marginal rate is in the United States going back to nineteen forty five we come up
with some between 17 and 20 percent right now. I think we're about seventeen point nine percent. Is there a right number. No
I think you find that out by bringing it down and seeing it get you more growth. You certainly saw when Coolidge cut tax rates
you saw strong economic growth until Hoover raised them. And then when John F. Kennedy cut marginal tax rates you had strong
growth until Nixon raise taxes. And with Reagan you had this strong growth until Bush and then Clinton raised taxes. So it's
we've been getting towards a point which may maximized. I'm not sure maximizing revenue is the key. I'd like to maximize growth
and job creation and innovation. Certainly we learn a lot from the states. There are 50 states. Eight of them have no personal
income tax at all and they tend to be doing better than other states. People move to Texas and Tennessee and Washington state
and Florida and now there are another and then another eight states that have single rate taxes. So even Democrat or
progressive states like Massachusetts and Illinois have lower income tax rates on individuals 5 percent in Massachusetts about
4 percent in Illinois because it's a flat rate tax. And that's difficult for politicians to raise. Easier to reduce. But there
are now eight states that have income taxes that are phasing those out. You just saw the vote in Georgia to begin phasing out
the income tax to zero. Mississippi's done the same thing Louisiana did last year. Iowa top rate individuals six and a
half down to a four percent under four percent flat rate with the goal of then taking it down to zero. Oklahoma is looking to
do the same thing both in North Dakota and in West Virginia. One body has voted to face it out to zero. And the other is looking
to do it. So there is a movement to follow the success of the lower income tax states. Nationally among the 50 states and
we've seen in the United States when we took our corporate rate with the Reagan tax cuts down to thirty five we had one of the
lowest corporate rate taxes back in the 80s than all the other countries said. That's a great idea. And they all came in under
a 35 percent rate. And so for quite some time we were very uncompetitive. We're down to 21 percent now which makes us
fairly competitive but not ahead of everybody else just in the middle. Going to talk about that relationship between taxes on
the one hand the rate of taxation on the one hand and economic growth on the other. Isn't that clear a relationship. Because as
I recall as you mentioned there's a Clinton tax raise during the Clinton administration and in fact growth went up did it not.
Well you also at that point had a significant cut in the capital gains tax which the Republicans forced through in 94. As soon as
they took control of the House and Senate growth under Clinton was weak for the first two years when he was threatening all
sorts of tax increases. When the Republicans took the House and Senate met there wouldn't be a tax increase. In fact there was a
cut in capital gains taxes. That's when you saw the dramatic growth that flowed through. So watch Congress more than the
president when you want to see what people think will happen with taxes because Republican presidents can get forced by
Democratic. Congress has to raise taxes. Democratic presidents can get forced by a Republican Congress to cut them. Watch the
Congress to see how it goes. But on the competition issue one of the most dangerous things that's being discussed is this global
minimum tax which would end tax competition. So instead of competing with lower taxes and low cost of government we're
going to compete with what lower wages. That's not what America wants to compete on. We want to compete on a more competent
government with lower tax rates and more innovation that flows from that not by trying to beggar thy neighbor with lower wages.
So this PAC or cartel of getting all the countries together and saying we're going to trust China won't cheat which by having
lower tax rates than you're supposed to. One wonders. And so many of their companies are run by the government the awfully
easy to manipulate that compared to the United States or European countries. I think the idea of a cartel where the
governments get together and set a minimum. Tax which stock tax competition which has been very healthy and in the same
category. The other danger that we're hearing about is price controls on pharmaceuticals. Not. It's sort of a tax or a
confiscation of people's wealth. It also means less innovation less investment into pharmaceuticals for the next time. There's
another Covid that's particularly damaging and there's two thousand years of history of very bad results. Every time you
fix price when the government fixes prices and has wages and or price controls I should note that I think that part of the
motivation for the global minimum tax was to avoid what you were describing earlier which is putting U.S. companies at a
disadvantage. But I really am curious Grover more generally you've been on this quest for a long time now. You've been very
consistent but it is what drives you fundamentally economics that is the need for more growth or is almost a matter of
philosophy or even morality about really what's fair and what's right about how much the government gets how much individuals
get. I think it's three things the Constitution's fairly clear about certain limits particularly on the federal government on
taxation what's allowed to be taxed. The idea that Biden has of taxing assets or unrealized gain is clearly not constitutional.
The courts have ruled on this in the past. But you just have to read the constitution to see the very limited number of powers
that the states were willing to give the central government when they agreed to the Constitution. They made it very clear which
can can't do taxing assets taxing wealth taxing unrealized income meaning income. You don't have the value of your house
goes up and they want to tax the income you got because your house is worth ten thousand dollars more. That sort of thing.
Bad policy but it's also not constitutional. So I think step one is a constitutional. Step two is good for the economy. Why would
you raise taxes at a point where it kills jobs and slows economic growth. And then third there is a preference. If you
earn a dollar it's yours. And the government needs to have a very good reason to explain why it has to take your dollar and
spend it some other way. So I think that we ought to say you earned it it's yours. Now the government has to make the case
why it's actually necessary and important and not counter productive to take some or all of that.