TRANSCRIPT: The Republican Debate

Some of the reasons are the fair tax, for instance, charges a 23 percent tax, plus state sales tax, on a new home, when you purchase a new home. But if you buy an old home, there's no tax. Think what that might do to the construction industry.

We need to thoroughly take it apart before we make a change of that nature.

That's why my view is, get rid of the tax on savings and let middle-income people save their money tax-free.

YEPSEN: Mayor Giuliani, which one of the three options would you...

(APPLAUSE)

A national sales tax...

GIULIANI: Eliminate the death tax.

ROMNEY (?): Of course. Of course.

GIULIANI: And that should be eliminated immediately. It makes no sense at all.

In 2010, the death tax is going to go to zero percent. And then it's going to go to 55 percent in 2011. You do not want to be on a respirator in 2010.

(LAUGHTER)

(CROSSTALK)

STEPHANOPOULOS: Governor Huckabee and then...

GIULIANI: And then I would say the most -- the most sensible thing to do is to simplify the tax code, reduce taxes, keep taxes low.

I don't think -- I think the flat tax and the fair tax are both very intriguing. And if we were starting off at the very beginning with taxation, the first argument I would make is let's not have any taxes.

The second argument I would make is the fair tax or the flat tax would probably be a better way to go.

STEPHANOPOULOS: But you're not for the fair tax now, correct?

GIULIANI: It would be too complex to get there. And somebody would have to show me how we're going to make that transition.

And, also, the thought that there wouldn't be an IRS with the fair tax -- well, who is going to administer the sales tax? And who's going to administer the people that are exempt from the sales tax? And who is going to administer what items might be exempt from the sales -- maybe food would be exempt from the sales tax.

(APPLAUSE)

YEPSEN: Senator McCain, how do you come down on this question?

MCCAIN: I believe that we've got to simplify the tax code. But one of the first areas we've got to go after is the alternate minimum tax, which is going to eat in to 20 million American families if we don't eliminate it, and very quickly.

Look, when we found out that Congress could not close a single military base when we had a huge number of them, we appointed -- we passed a law where we appointed a commission and they said we would close so many based and Congress votes up or no -- up or down.

I would find Alan Greenspan. I'd say, "Give us your recommendations." We'll pass a law. And we will vote on Alan Greenspan and his commission's recommendations, yes or no, up or down.

That's the way you're going to simplify the tax code, which now requires $140 billion of American families' income to prepare their tax returns.

(APPLAUSE)

STEPHANOPOULOS: Congressman Tancredo?

TANCREDO: The reason why we absolutely need to go to something like a fair tax -- and I am a co-sponsor.

And by the way, if you don't understand how it would work, I would suggest to you that you read Neil Boortz's book and John Linder's. It's a perfect explanation of how it works.

GIULIANI (?): (inaudible) read it -- underlined it.

TANCREDO: Here's -- well, then you should know how it works.

GIULIANI (?): We just disagree about it.

(LAUGHTER)

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