ALI VELSHI (HOST): We've seen it under the Reagan administration, we've seen it in the UK recently. When you lower tax rates on corporations, you don't see any corresponding wage increase in the United States. That's the bottom line. There's just no evidence of that actually happening. So I'll tell you what happens, if you are a company or you’re wealthy in America and you lose the estate tax and you lose the AMT and you get the corporate tax rate reduced from 35 to 20, those are absolute gains. there is no question that’s going to happen if one of these bills passes. But if you're middle class you know you'll get an average $1,200 gain and everything else is a hope. You hope economic growth will hit 3%, you hope the companies will take the savings that they have in taxes and somehow build factories that'll employ more people and not outsource. So you know what I am saying, if you're middle class in America, this is on a wish and prayer. If you're rich, this is a gift.
REP. RODNEY DAVIS (R-IL): I don't think so. As a matter of fact, you and I must have a distinct disagreement on what the American economy and small businesses throughout this country are going to do when we put more money into their pockets and allow them to invest more money in their businesses. They are going to buy more equipment, this manufacturing and --
VELSHI: Why, sir? Why? Congressman, there's no shortage of capital in this country for businesses --
DAVIS: Because I've seen it happen --
VELSHI: Interest rates are as low as they've ever been. Money is everywhere to be had. Companies are not expanding, not because of the shortages of capital or money or tax rates are too high. You know why companies expand? When there's demand. I just don't know where you are going to think this all of a sudden demand is going to pop up when you don't give the people the break, you give the companies the break. Companies have a lot of money.
DAVIS: We believe we are giving -- you look at the individual tax bracket changes that we've put forth and we are focusing completely on the middle income and lower income families. They're going to be able to ensure that their taxable income continues to go down, and that means also a fair, flatter, and simpler tax code to allow them to put more money in their pockets and participate in their local economies and help their Main Street businesses. And I do believe that companies in our Main Streets are going to continue to invest and grow in our communities to be able to help create the jobs that we know are going to be a part of this package once it passes.
VELSHI: I am going to put it on the screen. You won't be able to see it but I'll tell what you it is. This is the Reagan tax cuts when corporate tax rates went from 46% to 34%, wages fell for five straight years by as much as $3,000 adjusting for inflation. There is just no evidence that tax cuts result in higher wages. I'd be happy to study anything you give me that tells me otherwise. I feel like you are working off of talking points, sir.
