to hearh c-span ,resident trump and joe biden and watch debates in some of the hottest contested house and senate races. campaign 2020 coverage every day on c-span, c-span.org, or listen on the c-span radio app. your place for an unfiltered view of politics. >> the contenders, about the men who ran for the presidency but lost, and changed little -- changed political history. tonight, billionaire businessman ross perot. tonight at 8:00 p.m. on american history tv on c-span3. joining us now is scott hodge, the president of the tax foundation and here

>> joining us now, scott hodge. >> good morning. thanks for having me. >> for those who don't know the foundation, how would you describe your mission? we are a nonprofit, think tank. we were born in 1947 by a group of business leaders who felt the american public and needed more data and information and nonpartisan analysis of tax not just at the federal level, but we are also doing a lot of work at the state and local level, working with legislators and governors across the state to improve their tax systems. you is theopic for tax policies of both -- let's start with joe biden and the things he is proposing as far as tax policies. some of the highlights, i will read them and then you can comment on them, raise the rates securityly a social tax to earnings above $400,000,

also tax capital gains and dividends at ordinary rates of annual incomes of more than $1 million. those proposals, what would they accomplish if they were enacted? guest: it would certainly make the tax code much more progressive than it is today. intendingat biden is and what he has been very honest about what he is trying to do. we analyze his overall tax plans, we found that it would raise about $3 trillion over the next decade. however, when you factor in the economic impact of these taxes, and they would slow the economy, according to our model, it would raise about $2.6 trillion over a decade. we do find it would actually lower the size of the economy by 1.5%. it would perhaps reduce the employment by a little over half a million jobs and reduce wages by about 1%.

while it is intended to raise revenues to pay for spending programs, there is an economic consequence according to our models. host: we hear mr. biden say quite frequently those increased taxes are only of concern if you make over 400 thousand dollars. what do you think of that? certainly, from a legal perspective, those are the folks who will write the checks. we economists tend to look at what happens after that and the flow through to the economy from those taxes. that is where we find the economic burden of some of those taxes will fall on lower and middle class americans. the long term, everyone will see a slight reduction in their after-tax incomes because of the economic harm or reduction in the size of the economy that will result from those taxes. host: how does that fall to all americans? guest: the corporate tax increases that are in his proposal amount to about half of

that $3 trillion tax increase. we estimate about half of that will fall on the backs of workers through lower wages. that is a pretty common assumption among most economists. even though he is proposing to tax corporations with higher tax rates and fewer deductions, we find that the economic consequences of that will actually fall on workers with lower wages. host: you mentioned the corporate taxes. the plan for joe biden has increased that rate to 20% currently from 21%. he would also impose something called a minimum tax for large companies. guest: part of the motivation for this is the concern that corporations report one thing to the irs in terms of their income and tax liability, but they tell their shareholders a very different story through their

financial reports. that is often the concern they are not paying their fair share because they report in a much lower tax burden versus what they are showing their shareholders or vice versa. by offering this 15% minimum tax they arencome, essentially forcing companies to look at their tax liability in both ways and pay the higher of the two. gain theirhey can't financial reports versus their tax returns. host: this last one sounds complicated, so i will just read it to you. u.s. firms toe on 21%. guest: the tax cuts in jobs asked, which was enacted in 2017 change the international tax rules that had been governing u.s. companies for decades.

it moved to what is called a territorial system, reducing the taxes that companies pay on their foreign income, but we placed a minimum tax on those so that they could not hide some of taxr products in low countries like bermuda or the cayman islands. this was a way to try to avoid or prevent what they call profit shifting or tax avoidance. this minimum tax is set at about 10.5% currently. biden would increase that to 21%, which means companies would face a much higher tax burden on their foreign earnings. host: one more question about the proposals from joe biden. if i were a person who made much of my money because of stocks or anything like that primarily, what happens to me hypothetically? guest: if you are a millionaire, you would pay much higher taxes on your capital gains and dividends. he is proposing to virtually

double the tax rate on capital gains and dividends from 20% today. they would have to pay the income tax rate of 39.6% on those capital gains and dividends. it doesn't stop there because there is the obamacare surtax on those earnings. that would increase the rate to 43.4%. that would be the highest rate ever on capitol hill gains and dividends or at least since the carter administration. that is a big change for high income earners. host: our guest joins us to talk about tax proposals. you can ask him questions. if you support the president and mike pence, one line, if you and kamalae biden harris, others, another line. we will start with an unspecified tax cut to boost take-home pay and also an

unspecified made in america tax credit. it is here again, difficult to analyze the president's proposals because they are so vague. he has just proposed or at least released a set of talking points or bullet points. it is very difficult for those of us on the outside to try to analyze them or even understand what he is trying to do. i think what he is saying, number one is that in his budget this year, they did propose extending the tax cuts and jobs act at least for individual taxpayers. and of those tax rates lower tax burdens on middle income people would begin to expire after 2025. his budget would propose extending those. in terms of some of these other proposals, such as the made in america tax credit, he has been very vague. what is interesting about it to me is that it is kind of a step toward industrial policy where a lot of the proposals are really

aimed at trying to incentivize investment here in certain types of industries such as pharma or manufacturing and so forth. it is kind of a departure from traditional or republican orthodoxy, which is just to lower tax rates and broaden the base and let the market work. host: one of those things highlighted is something called 100% expensing for certain industries including pharmaceutical if they bring their manufacturing back. guest: that is a proposal we would recommend be broad-based for all industries. the most is one of powerful economic incentives you can have in a tax system. only newit encourages investment rather than old investment. we think it is very progrowth. the tax foundation economists would disagree to just applying at a certain industries over others. we don't think you should play favorites through the tax code. host: something the president

talks quite a bit about particularly when it comes to benefiting the african-american community, opportunity zones. guest: that was another proposal put into the tax cuts and jobs act a few years ago sponsored by senator scott from south carolina. it is aimed at low income communities to try to essentially allow investors to do further capital gains on that investment indefinitely. as they are trying to profit those communities and increase the amount of investment there. we're still waiting to see the impact of those, but the president has offered to expand that. getting back to the manufacturing issue, i should mention that joe biden also has a made in america tax credit as well. what is interesting is to see both parties kind of move toward this industrial policy through the tax system.

it could be because the results of the covid crisis, where there is a lot of concern about supply chains, the fact a lot of pharma manufacturing is done abroad rather than here in the united states. both parties are maybe groping toward different types of tax policies that will incentivize companies to bring back a lot of the manufacturing to the u.s. rather than have it overseas. host: there is a viewer off of twitter asking to explain your models saying that, to all economists agree with your findings on models? guest: our model is fairly mainstream. equilibriumral model and assumes the u.s. economy is in equilibrium economy where capital can flow back and forth pretty freely. it is considered a fairly mainstream model. if you look at the other groups that have done analysis on the biden plan, in particular, most

of the results are fairly similar if you normalize their assumptions. we all find that in some way, the biden plan would reduce the size of the economy, lower the number of jobs in the economy and lower wages as well. one of those outliers would be moody's because their analysis says joe biden proposals would produce rebounds and economic growth. guest: i think we have to separate what the models are looking at. some only look at tax policy and try to make estimates on biden's spending plans. we estimate he would raise $3 trillion for his tax increases. his spending proposals are somewhere in the neighborhood of $5 trillion or even higher. what moody's and others have tried to do is estimate how that spending would impact economic growth.

that is something beyond our model. we were not comfortable going in that direction because we don't think there is enough consensus around how different types of spending will impact the economy. the congressional budget office at things like infrastructure spending. while it can have a modest increase in economic growth, it is about half the returns you would find in private investment. i think you have to take some. of this with a grain of salt host: we have called lined up. your first one is from spokane, washington. thanks for waiting. you are with scott hodge. caller: hi, good morning. the reason i call is that i understand that you people can raise, or the government can raise trillions of dollars. the problem is is that what has happened in the past, a whole lot of people benefit from that, but not the american people. is less influence, more

unrest. trillions and trillions of dollars go out the door and out of paychecks and it does no good for anybody except a lot of people get rich that should not be rich. and i havel that way kind of watched it happen that way and i don't mean to put you down, but i believe mr. biden -- well, i just don't see their agenda as being successful in the time he has been there. host: we will leave it there and let our guest respond to that. guest: a lot of people don't realize how progressive our tax system is. the rich in america, there was an international analysis done, they pay the largest share of theirx burden than do

counterparts in any other industrialized country. the top 1% of taxpayers in the united states pay 40% of all of the income taxes while the poor in america have the lowest tax burden compared to the poor in other countries because we do so much through the tax system with things like the child tax credit, the earned income tax credit, aimed at low income alsoe who work, is refundable. system lot for the tax to redistribute income from the top of the income scale down to low income people. we do much more than any other country. to try to redistribute income for the tax code. virginias is mark in on our undecided line. hello. caller: or support others line. good morning. -- topic for me.

like two of the other colors, i feel like this really is a political question because whether it is republican or democrat's, no one has really seen a true tax relief. mr. hodge, i would just like to make a proper, and have you just respond. i think henry ford, who proved to be very rich, he had a really interesting model. his model was, how do you make all of -- i can make all of the model t cars i want to, but if i don't pay the proper wages, i can't have my workers /ambassadors drive the vehicles. you are talking to someone who grew up in a family of five, whose father worked in the postal service. 1970's, upin the civil servants,

postal servants could provide for a family of five or six depending on where you lived. the problem is post-reagan, they became a super consolidation of small to medium businesses. it became monopolized. what we are not really talking about is not so much the tax issue, the problem is the henry ford model, which is, i want to maintain my workers as long as i can because i have a higher quality control and i'm willing to pay them well for their services. host: thank you very much. mr. hodge? issue isrrently, the not necessarily the tax burden on the middle class because there has been a lot done recently to lower the tax burden on the middle class. what is necessary is to change the tax system to improve the investment by businesses into

tools and technologies that make our workers more efficient, more productive and more productive people earn more. it is really important that we change the tax system to incentivize the sort of private investment or private infrastructure into the tools that will make our workers more productive because ultimately, that will raise living standards across the board. host: when it comes to wages overall, are the general thoughts on what both sides offer? guest: they have not really address to that, or at least, i'm not aware of how they have been trying to address that. both want to do more for the middle class. again, i will reiterate, we have been a lot for low income people over the last few decades with these various tax credits and even lower rates. middle burden on the class is about as low as it has been in decades. anthony from kentucky, a

supporter of joe biden. caller: hello. my question is, how can a person period of 15 a years and talk about a tax thing [indiscernible] they ain't got to pay no more. host: mr. hodge? guest: there are a lot of questions about the president past tax returns. i have not seen them, so i can't really comment on them. what i do thinks -- think this speaks to is the need for tax exemplification. it does raise a lot of questions about the complexity of the code and ability of people to use accountants and lawyers to minimize their tax burden. i