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Leo Hindery on Reforming the U.S. Tax Code

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    Fmr. Obama Economic Advisor Leo Hindery, Jr., on why the tax code needs to be reformed.

  • Duration 6:33
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No tax hikes that may be tax reform house speaker Jon banner saying today it is quote under discussion.

My next guest says it's that corporate tax loopholes.

We really should be focusing on Leo Hendry is a former economic advisor for President Obama so -- what do you mean that we should be focusing on that -- Right you know I've listened to -- earlier guest tonight in his hand and the issue that seems to get pushed aside -- you you can't fix these problems there then there are enormous both both parties know -- enormous.

You can't do this in in sort of -- revenue neutral fashion you've got to both increased revenues from somebody.

And cut expenses from somebody as well and and there's a big great Sturm und drang tonight about who we're gonna cut from.

That that's the four trillion dollars I don't know -- four trillion or two trillion that's one issue.

But we gotta raise revenues and -- we -- raise them from a we're gonna continue to raise them on the backs of the middle class.

But what about stopping thank you know the debt payments coming out of the stimulus of people -- are tax cheats or you know people getting tax credits.

Who are just -- off the system and they don't deserve it and they haven't pay taxes.

Into the system for awhile what about stopping the government -- first rate get another nickel -- -- the American people.

You know the government waste is always the UK the excuse for not to act if -- that the -- the line that we believe -- the -- the -- -- the colors are contempt for government.

Fix the government nobody is arguing in at least from my camp saying don't fix the government but you also have to acknowledge that there is a class of people I'm one of them.

I just mentioned in the break it that I pay I pay a lesser -- -- -- actually is that the in the my business career than -- paid at the start of it.

And that's not right I had been very fortunate very blessed in my career and I pay a lesser rate of tax the new pay actually a -- -- tax in the -- -- -- behind us tonight.

You -- art art Laffer who sit on the supply a big supply -- he's always said that it now he has said recently at least that you know he believes that rich people should pay more at a lower rate and if you get in that means getting rid of the tax breaks what do you make of that argument.

Well I know a lot.

Rich people none of them are in personal position to -- -- re inflate this economy.

So when you give us these tax cuts are we do is get wealthier we -- all the refrigerators all the -- what.

All -- -- about the idea pay at a lower lower you know at a rate that he says he should pay ad and think -- -- point 15%.

But get rid of the tax breaks he wants people in other -- rich people to pay more.

-- -- -- -- -- And a single issue with Laffer removing loopholes.

And whether they be corporate loopholes -- personal -- -- loopholes -- I couldn't agree more.

But there is this fundamental issue that we were we designed to progressive tax system where the rich -- to a greater share of their income than the pork we we we've -- that we started of.

And you even then I'm in the rich do pay more and air under it might pay more their absolute dollars but they paid a lesser rate of tax I paid a fundamentally lesser rate of tax -- than you do.

Because I make my wealth in -- sort of China Stanley you're saying but what is a fair amount aren't so we know the 40% of percent of the American people don't pay any taxes -- deficits -- system whatsoever.

We know the effective rate for corporations is probably not 35% this Friday 20% to -- less than probably less than that well the present President Clinton said he thought it was to 3%.

So you know -- the American people have said and get this reader to reader's digest poll a fair amount attacks of and it's 25% I think that's saw an American people want to pay their fair share Leo you know what I would you don't like what would you be plowing money into a company.

Right that was blowing it and throwing it into a furnace why would you pay more into that company why would you invest in that company was throwing money -- -- first -- this government has.

Well but we -- -- would you invest in that company.

No but I -- invested any company or any government that waste my resources but that's it a separate issue it was the same issue.

Well let me give you an example that I think is resident with Hewitt in the numbers -- regret I can think that we can prove to -- that the -- class this this is that.

That that group of women and -- sort of above a half a million dollars of income probably have an effective tax rate of about 12%.

Right where as the woman -- man walking down below -- on on sixth avenue here in New York frightening 35%.

A 50% state and local -- yeah there's a cent but but that wealth -- is probably paying 12% I have total federal state local on average on average and that -- -- because the deferral some because.

Were able to drive into the capital gains arena and because we have exemption -- offshore and we offshore.

Aren't so -- so what do you do there you really are Ford just gonna and then rich to pay more than -- how much more.

Have to -- I'd like kind exchange -- I've site every play -- -- that you say it's fair for them.

Well I I I think -- all of these all of these sort of capital gains types issues whether they're around carried interest or dividends or.

-- or just the way what's the fair tax rate for the rich well I effectively in the 50% range.

50% Leo I mean look at you're also talking about small businesses right and small this is -- gonna get -- I mean.

I don't kid you know why your time and again I hear the statistical.

Effect 3% of small businesses a -- for its one.

I don't care once small business gets slammed and how does not more than it is about the -- -- -- -- -- -- -- the point that it would hurt small businesses who on the job creators and we're seeing the ADP report today they're putting their creating jobs and they gonna -- with higher rates but.

I promise you I I will sit here as long as you want and we will be exempt every small business every small form every medium sized business I'm simply targeting.

The extremely wealthy that the court how -- are gonna get for that -- thing.

You you're you're gonna get.

You can in dollars not as much as -- -- -- -- and probably at a trillion and trillion over that and that's just about hey two years' worth of interest on the debt because they're blowing -- the -- right.

That's correct that we don't Charlie spoke a moment ago about sort of that the foolishness of this of this argument we're having around the debt ceiling.

Why we know it's it's in its in its inexorable.

Constraint on the system why don't we sit down both parties.

And responsibly look at everything.

And then we wait to these sort of crushing times you know these these these periods of time when the when they were frightened that children -- you know -- I think what happens on August the second -- write the answers both of these parties have to cut and that both of these parties have to raise responsibly.

You can't hear what mr.

-- did last week is saying that I will only cut.

I will never raised I will never rate they'll walk out if we rate -- do you think they're really gonna cut four trillion overt now 1012 years I mean we're just signed an agreement to -- greater -- -- I think we are being none of us have been so foresight -- to look -- twelve years you can't spend ten billion a month and Afghanistan until we -- gonna save anything.

Meaningful over it over a decade plus all right Leo Hendry so it's good to be with you so much.

I so appreciate your time very much and I hope that people are Washington listening to stand up and I -- somebody listening very -- thank you so.

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