Entrepreneur:Governor, you've joined Vice President Gore in a call for allowing small business to join associated health plans, but the vice president has gone further in proposing tax benefits for companies joining these plans. Do you think that's a good idea? Why or why not?
George W. Bush: Tax benefits are a great way to make health insurance more affordable to entrepreneurs and employees of small business. I have proposed several affordable health-care options that allow the individual, and not the government, to find the most suitable health insurance plan. My health-care tax credit provides a 90 percent tax credit, up to $2,000 annually for the cost of a family's insurance compared to Vice President Gore's plan to provide a 25 percent tax credit for the cost of a displaced worker's insurance. As you noted, I support small business pooling to purchase health-care plans for their employees. I also favor the immediate 100 percent tax deductibility of insurance costs for the self-employed and the expansion of Medical Savings Accounts, a proven means to help the uninsured.
Entrepreneur:Small businesses are much less likely than big businesses to offer a retirement plan. One solution you've proposed is to allow individuals to use a portion of their payroll taxes to fund a retirement account. What, if any, role would small business play in contributing to their employees' use of these accounts under your plan? Are there other approaches you would pursue to increase small business participation in these retirement plans?
Bush: Under my plan to save Social Security, employers would continue to match employee contributions just as they do under the current system. However, I would allow Americans to invest a small portion of their Social Security taxes into the stock market. Current and near retirees would be guaranteed their promised benefits. If Social Security were to remain solvent under the current system (it is expected to go broke in 2037), it would offer only a 2 percent real return to new workers, compared to a 4 percent return with government guaranteed inflation indexed bonds and a seven percent average real return in stocks.
The federal tax on savings can be as high as 70 percent (40 percent income tax and 55 percent death tax). I have proposed simplifying and reducing our tax code from the current rates of 15, 28, 33, 36 and 39.6 percent to four rates of 10, 15, 25, and 31 percent, allowing Americans to save more of their earnings for retirement. My tax relief plan also eliminates the death tax, a burden on entrepreneurs and small-business workers who wish to keep their business within their families. Ninety percent of businesses that fail after the first generation cite the death tax as a factor for their demise.
As you know, research and development plays an important part in the development of new ideas. Another important part of my tax relief plan is the permanent extension of the research and development tax credit.
Entrepreneur:You've attempted to pass changes to the franchise tax in Texas that eliminate the different treatment of classes of business (i.e. sole proprietor vs. incorporated business). These proposals have been perceived as equalizing the difference between small and large businesses. Should entrepreneurs expect that a Bush administration would try to equalize the federal government's treatment of small and large business? Can you site specific areas where such discrepancies exist at the federal level?
Bush: I believe that lower taxes promote economic growth and are our best insurance policy against an economic downturn. I have proposed numerous tax cuts that will benefit individuals and small businesses, including lowering the marginal tax rates for all workers and entrepreneurs, and making the R&D tax credit permanent. I realize the important role that small businesses play in our economy and will promote policies to help them grow and prosper.
Entrepreneur:You've developed a reputation for working with legislators in Texas--and for believing that neither you nor your staff have all the answers to a particular problem. Would a Bush administration be less likely to propose solutions to problems in the future? Or would it raise issues and then develop solutions after considerable debate?
Bush: I am proud of the fact that I been able to work with members of both parties of the Texas legislature, and I will bring this spirit of bi-partisanship to Washington. I have also demonstrated leadership in a number of policy initiatives during the course of this campaign. These include my plans to save and strengthen Social Security and preserve and protect Medicare, including offering prescription drug coverage for seniors. Both of these programs were once thought of as "the third rail of American politics." I have proposed a responsible tax cut that increases the disposable income of all Americans. And of particular importance to future entrepreneurs, I strongly support education reform, where we closely measure student performance and increase accountability.