president trump's speech today in saudi arabia. ♪ >> this week on q&a, author and journalist t.r. reid. he discusses his book "a fine mess: a global quest for a simpler, fairer, and more efficient tax system." host: t.r. reid, better known as tom, and your new book, "a fine mess". you start out in chapter three under "taxes: what are they good for?" with "on one saturday afternoon, a great teacher of ethics told his students" -- do you remember the rest of it?

guest: of course. they told us to get out of the classroom and go over to the synagogue for today's lesson because he has a lesson on paying for community goods, for taxes. what happened if the teacher and his students went to the synagogue and halfway through the service, they passed the collection plate and a guy in the front row with beautiful robes, the rich guy puts 1000 dockets in the plate. maybe two rows back, an even fancier guy puts 2000 dockets in the plate. finally, a gets back to the public row, where the poor people sit in the back, and the story goes that this poor widow dug into this moth-eaten bag and pulled out a coin worth two cents, and she dropped it into the collection plate, and that was the lesson through jesus christ said to his disciples, verily i say into you, that poor widow gave more than anyone else. host: what was the point of telling that story in this chapter? guest: it is a basic point about

fair, just taxation, that it has to be proportionate to wealth. the important question is not how much you pay, but how much you have left after you have paid your taxes. so if a multimillionaire gives there $1000 and a poor person is gives $10, under christ's reading, the poor person gave more to the common good because it was more of a burden on him. and the lesson for tax policy is that tax rate have to be graduated. we have to ask the rich to pay at a higher rate. and that has been the case with the u.s. income tax since its first day in 1913. we have always had the rich pay at higher rates. host: you did a book on health care the last time you were here. when did you decide to write a book on tax? guest: i was living overseas and we were going to the doctor. i have three kids. and we were a little worried at first about going to a foreign doctor.

we are americans. we know we do everything best, right? turns out, the care was great. the facilities were fine. we did not have to wait very long. and the prices were very low. 1/10 what you would pay in america. and i just got interested in that. i had very good health outcomes. i thought "how come they can cover everybody, better health outcomes than we have, and they spend way less?" i went to my publisher. it's a great idea for a book. i'm going to go around the world to the doctor and see how they treat you and how much it costs. this was at penguin press. i could see her face. "oh my god, health policy. those books never sell." but she believed in it. it was extensive. she had to send me around the world. and it we brought that broke out during the debate on obamacare, and americans were interested in health policy. it hit the bestseller list the first week. it really did great. about one year later, the editor called me and said "that book of yours is selling like mad, you know?" she said "i'm so glad i had that

idea," but it was my idea. i said "great idea you had." she said "here is the new idea. we are going to have a national debate on tax reform, so look at taxes to see what we should do and what we should not do." host: when they tell you they want a book like that, who pays the costs? guest: they give you an advance against royalties, and it is supposed to be an estimate of what i would learn on the first year's sales, but it turned out to be a negotiable number, so you know, if you have to go around the world and spend a lot of money to do the reporting, then you can negotiate a higher number. basically, they pay for it. host: what is one stop when you went around the world to study tax was the most important for you? guest: new zealand. i went to the world bank and ims and i said "what is it the tax code? who has got a good one?" and they know, and they said go to new zealand. and here is why. new zealand followed the fundamental printable of good

taxation, which the economists reduced to four letters, bblr. and that means broaden the base so you can lower the rates. so here is what they did in new zealand. they used to have a tax code like ours, hundreds of exemptions and deductions, and therefore, very high rates. then, they got rid of all of them. they said your salary, that his income. if your employer paid health insurance, that his income to you. in new zealand, if you get free parking at the company, that is worth $20 per month. they attacked you on that as income. then, no deductions. you want to give to charity, that is great, we are all for it, but we are not giving you a tax break. if you tax everything and give no right off, then you can set the rates very low, so new zealand has the lowest rates on labor income of any developed country, yet they bring in more revenue per capita than we do. so that is really where i saw this principle. then it turns out, around the

world, other countries have recognized the principle of bblr, broaden the base, lower the rates. but that's where i saw it first. host: donald trump back on december 1, 2016, after he had been elected, had this to say. pres. trump: we are going to be lowering our business tax from 35% hopefully down to 15%, which would take us from the highest taxed nation virtually in the world -- this is terrible for business -- to one of the lower tax. not the lowest yet, but one of the lower taxed. guest: he often says the u.s. is the highest taxed country in the world. mainly, that is an alternative fact. that is not exactly right. a standard measure of tax burden is called overall tax burden, and here is what they do. they take total federal, state, and local taxes, add them up, and divide by the gdp what percentage of total wealth. by that standard measure, the united states is a low tax

country. in fact, we rate 32nd out of the 35 richest countries in tax burden. where he has a point is the corporate tax. our corporate income tax rate is higher than almost any country. france's is higher. he is right about that. that is a competitive disadvantage for american companies, plus because that rate is so high, 35% for most companies, they spend tens of millions of dollars on lawyers and consultants and accountants to figure out how not to pay the tax. host: what is the story about the caterpillar corporation? guest: they are based in purely you, illinois. how american can you get? they make these earthmoving machines used around the world. caterpillar machines last 50 years. and people buy them and use them every day. the problem is, the crankshaft breaks or the plow breaks or something, and because people want to keep using this,

caterpillar guarantees they will replace any part anywhere in the world within 24 hours. it is a great part of their business, and very profitable part of their business. the spare parts for caterpillar are designed in the united states. and then they ship them and make a big profit on this and they hired price waterhouse cooper to help them cut their taxes. and price waterhouse said, why don't you move the spare parts business to switzerland? very low tax country. and they did not move any warehouses. they did not move any parts. they just move the titular head of the business to switzerland, saved them billions of dollars in tax. that is what companies do at a high rate. host: did they still make the spare parts in peoria? guest: they designed the parts in america. the sales were basically made in america, but they were assigned to the swiss company and therefore, the profit was paid

in switzerland, 6% instead of the 35% in america. host: why would the congress allow that? [laughter] guest: congress allows that because corporate lobbyists have power, and they have written the code. what we should have done i think, is take away all the gimmicks and ability to do that kind of thing, and lowered the rate, and you can bring in the same amount of money. but because the rate is high, it is in corporation's interests to hire lobbyists who befriend a member of congress and get this clause in there. brian, theynow, hide them. they do not say, xyz corporation does not have to pay tax. they say "a company incorporated in delaware on october 16, 1913" -- that would be general motors, but they never say that. they hide them. the tax code, there are hundreds of these.

host: where did the term rifle might come from? guest: it means attached provision that only applies to one company. boom. a lobbyist comes in and says "my client needs to write off taxes, needs an exemption so they don't have to pay so much tax," and the members of congress do not want to give it to everybody because it would be too costly, so they designed it, they say there is one that says a broadcasting company owned by a religious organization south of the mason-dixon line -- well, there is on the one. but instead of saying the name of the taxpayer, they write that in there. if these really were valid exemptions, if there was a good reason for them, they would put the name in. the fact that they hide the name tells you right there that they are hokey. host: what is the story on apple? guest: apple is fabulous and ducking tax. apple has moved a great deal of ireland, whereo

it is a tax rate between 2% and 12% instead of 35%. apple makes its money, you know, from design, from software, from intellectual property. and you can assign that anywhere you want. so they assigned a lot of it to ireland, and then, when you buy an apple product in europe, a license fee goes to apple ireland, and that is where it is taxed. host: what about google? guest: google, same thing. they have a subsidiary in bermuda where the corporate tax rate is zero, that owns a subsidiary in ireland, that owns a subsidiary in switzerland. so there is a sub within a sub within a sub. it is totally complicated, but cuts the tax bill. if that rate were much lower, it would not be worth it to pay a consultant millions of dollars to get you out of it. host: here is the menu write about in your book, a man named steve forbes. let us hear from him.

>> throw away the code and put in a single rate your we recommend 17% are generous exemptions for children so nobody gets a tax increase in this thing. you can literally do your tax return on a single sheet of paper or a few keystrokes on a computer. by the way, 40 countries and jurisdictions around the world, places like hong kong are not a country, but they are administering, have variations of the flat tax. this is not a laboratory theory. guest: he ran for president on that twice. he made the cover of time and newsweek in the same week with the flat tax. host: who else ran on flat tax? guest: rick perry, carly fiorina, ted cruz, several of the republicans ran on flat . donald trump that it would not work. he said it was a giveaway to the rich. host: what do you think? guest: the point of my book is , let us look at other countries

and see people who have tried these ideas, and i do not know where steve got 40, but 12 or 13 countries have tried the flat rate tax, where everybody pays 18%. it works if you are a former soviet republic with no capital investment and very low labor rates, and everybody has about the same income, so you do not need to gradually tax rates. it works for seven or eight years until there is an economic downturn, so 12 countries in eastern europe tried it, and most of them had to give it up because here is what they found out. that 18% rate, 19 percent rate, you cannot set it high enough to bring in the rev you need but still low enough for average working families to pay. you have to raise rates higher on rich people to bring in the revenue. and some of the countries, most of them got rid of it. some of them have kept it at great expense. hungary has a 15% flat rate on income tax, and to pay for the government, they have the world highest sales tax.

27% on everything you buy . similarly, estonia was the first country to try the flat tax. steve forbes cheered for them. way to go. they're flat tax rate i think is 19% now. but their social security tax is 34%. ours is 6.5%. host: you mentioned ted cruz. and i want to run a clip of him because he talked about another tax. this is back in early 2016. ted cruz: the business flat tax is not a vat. guest: a value-added tax. a value-added tax is a very good idea and just about all economists love it. it taxes consumption, it doesn't tax labor or savings or investment. it is an easy tax for government to collect and hard to evade.

so, 176 countries -- countries have this, but republicans like ted cruz do not like the vat tax because they call it a money machine. it brings in lots of money for government. if you use it to reduce the rate of the income tax, fine. it comes out the same when you're taxing consumption. republicans oppose it and democrats oppose it because they think it is regressive because poor people spend more on consumption than rich people. both of those problems are handle-able. you can manage it. i think we ought to have a vat and use the revenues to lower the rates of the other taxes. this professor at ucla has designed tax plans for 40 countries. he said to me, "you know, the vat makes so much sense even the u.s. congress will eventually figure out the vat is right. mark my words, within five years, america will have a vat."

and then he said, of course i have been saying that for 20 years. host: well, on that note, i want to run video of you, the last time you were here in 2009, talking about health care care. i want to see how you did. guest: i would hate to see that. [video] host: one year from now, will there be a health care bill passed in congress? guest: a bill will pass and the democrats with a victory, but i do not think we will get universal coverage, which is the goal. that is a ways away. it might happen state-by-state, so five years from now, maybe we'll have everybody in america covered? host: that would have been put -- would have been 2014, so how did you do? guest: i was right about the federal law. the past obamacare and the democrats declared victory, and it left 30 million people uninsured, so it is not the answer we needed. i still believe that the by state the way we are going to get universal coverage. i mean, a lot of big things have

happened in american history. in one state, female suffrage, minimum wage laws, interracial marriage, marijuana. and as i think you know, last year, i managed the campaign in colorado to try to pass a single state universal coverage plan. we lost. the insurance company spent $8 million to defeat us. but i still think -- i do not think washington, d.c. can solve our health care problems, so i think it is going to happen state-by-state. new york state has a plan that has passed one house of the legislature. the governor has endorsed it. if it passes the other, new york would come up with a plan to cover everybody. if they do it, the other states will follow. host: why did you decide to get that involved in an issue in colorado? guest: because i wrote a book about health care. i am just a reporter. you know, an objective observer. it just became totally obvious that a decent ethical democracy ought to provide health care for everybody.

and i started giving speeches around the country, and people would say "what is a good health care plan?" i said he has a cover everybody. if you do, you save lives and money. all the other rich countries do. so i kind of became an advocate. and then a group of people in my state, colorado, put up a plan to cover everybody and came to me and said "you run our campaign." well i believe in this cause. , how could i say no? host: you say $8 million was spent by corporations to stop it. is that all it took, spending money? to stop it? guest: yeah, our plan -- we had a state plan that would have cost $25 billion, but this year, coloradans are spending $60 -- $36 billion on health insurance. we had to make the case that you are going to save money with our plan. and the insurers came in with tv ads, and they were good ads,

funny ads, that said our plan is crazy, it is going to cost you more, you are going to be shafted, and that made the difference. we never had the money to get our story out, and they creamed us. host: would you ever do it again? not on that issue but any issue? guest: i would run another campaign if there was a cause i believed in. i certainly still believe in universal health care. i now know how we should do universal health care. you want to hear? we had a very detailed plan, a 35 page book to explain it. there was a lot in there for people not to like. we needed a two sentence constitutional amendment. here it is. the first sentence is "anybody in colorado who is sick shall have access to adequate health care. the legislature is mandated to affect this guarantee by january 1 of such and such." i think we could pass that one, and then they would have to do it, wouldn't they? we could go that direction next. host: are you still reporting for the washington post?

guest: i write for them, but i do not work for them anymore. but as a daily reader of the washington post, i'm very proud of my old paper. i think they are doing fantastic work. host: for this book, he went around the world. what country did you go to? guest: australia, new zealand. i thought new zealand was the marker for a good tax code. i went to canada, mexico, i went to probably 12 countries in western europe and seven countries in eastern europe. i covered the waterfront. i went to japan and china and malaysia for this book, so i saw different models. and some countries have very good ideas, and some countries have stuff we should never do. host: give us an example of what we should never do? guest: you know the carbon tax, democrats really like that. it brings in money and fight global warming. australia tried it.

and it lasted two years. australia passed a carbon tax. it was, anyone who omitted carbon had to pay it, so the power companies were the biggest payers. everybody's electric bill went up in the first month, and then the power companies very thoughtfully wrote on the bill "the reason your bill went up is because of that rock contacts." -- rotten tax. two years later, the new government throughout the tax, it was so unpopular. that turned out to be the wrong way to go about this process of trying to tax carbon emissions. host: what else did you see but didn't like? guest: the flat tax, i think did not work. france is the world champion at the rich. gouging and they at one point raised their top rate to 75%. ours is 39% at the moment. and guess what? when they did that, rich people moved to belgium and spain.

what i saw is there is a diminishing return. you get the rate too high, and corporations and people do not pay it. they find ways not to pay or move, so they did not move -- that did not work. host: you talked about an actor, gerard depardieu. guest: he was a very popular actor, producer. he was one of the richest men in france. when the attachment of 75%, he moved to belgium and said "i am never going to pay another euro to the french." and several others did, too. and i think what that demonstrates is that there is a limit to gouging the rich. at some point, people find ways not to pay. you remember last year, the panama papers came out? this law firm in panama city? it had hundreds of thousands of clients from all over the world who are trying to hide their money from tax authorities. when you get the rate too high, people do not pay.

host: you get a lot in here on the panama story. what was it? how did it happen? guest: there is a newspaper in munich, germany, that was covering notorious cases of tax evasion among rich germans, and the reporter got an email that said "you want data?" the email came from john doe, "you want some data?" and the guy said, how much data? and the answer was "more than you have ever seen." someone sent him 11 million documents from this law firm in panama city. it is a law firm that no one has ever heard of. host: 11 million documents! guest: yeah, pages. pages on the web. yet, over time. no one has ever heard of it except for rich people and their lawyers.

rich people will go to this law firm to hide their money from the tax authorities, and it is interesting. i would never give the new york times a scoop if i had it , but the german paper realized there was too much data for them to handle, so they formed a consortium of 400 newspapers around the world and passed this all out and somehow, they all held to the embargo. nobody broke it. and then, they released the stories on each country. there were very few americans using that law firm, incidentally. they were mostly europeans and asians. some heads of state were hiding millions of dollars in offshore , unnumbered bank accounts. host: why did they go through a law firm in panama? guest: it turned out to be very good at this. they started 20 years ago hiding money for rich panamanians, and then people in other countries heard about it. this panama law firm had nine offices in china. i mean, they were everywhere. if there were rich people wanted to hide their money from the tax

authorities, they could do that for you. host: let's say you make a lot of money in the united states, how do you move that money to a secret account to avoid the irs? guest: well, it used to be you could go to switzerland and open an account. the cayman islands. there are several of these tax havens. the cayman was a famous tax haven. you just go there or send your lawyer there with a check and open a bank account under a number, and then quite often, they issue you a credit card so you can withdraw your money using a credit card, and the irs theoretically does not know it is there. and in the united states -- was it five years ago, four years ago? -- passed a law, the foreign accounts tax complained -- compliance act, which makes it much harder for foreign banks or foreign financial institutions to hide americans' money.

it has worked, but hundreds of deaths brought home tens of millions of dollars that had been hidden. you and i pay our taxes. really rich people find a way not to pay their tax, and that is not fair. the bill worked. the investment bankers complain about it all the time, big government, nanny state. now, about 40 other countries you and i pay our taxes. have passed their own version of it to try to bring money home. host: are there many countries in the world that do not have withholding from their paycheck? guest: if the country has tax, it has withholding. but there are countries that have no tax. there are seven or eight of these mideast oil sheikdoms, where they make all their money from oil. they do not have to tax their citizens. many of them have foreign workers come in, and the tax them for that. there are beach resorts like monaco, the famous gambling resort on the mediterranean. they make so much money taxing

tourists that they do not have to tax their citizens. i say in my book that ben franklin said that nothing is inevitable but death and taxes, and no country has managed to outlaw death, but a few of them got rid of taxes. host: so what country besides france in the world is the highest taxer? guest: well, if you take this measure of total tax burden, that is, all the taxes collected as a measure of wealth, denmark, sweden, belgium, and france are the four big taxes. tax revenuestries, totals about half of all the wealth. denmark is first at 49%. host: how do the people in those countries? feel about their government or feel about that system? guest: nobody likes paying taxes, but people trust government much more than americans do. host: why do you think that is?

guest: because we formed our country in revolt against a tyrannical king. and we have always been scared of government. we sharply limit what government can do to you. they did not have that constitutional protection from the start, so they are just more comfortable with government doing stuff. and one result of this is that americans like to do things through private charity, that is done by government in other countries. americans give more to charity than any other country by a huge margin. the average american gives 100 times as much to charity at the average frenchman. the frenchman had schools and hospitals, you know, and shoulders and stuff, but it is paid for by government, whereas we tend to do that so more through private charity because we do not trust government. host: a little bit ago, there was a book out. you write about it.

by thomas pickity? guest: yeah? host: i had it. it shot up to number one on the new york times bestseller list. why did it sell so much? guest: thick as a brick. capital in the 21st century. people were astounded to see this book sell so well. it sold so well because he caught a problem, a current problem bothering americans, and that is the inequality of wealth and income. it used to be there was rich and poor. today, there is very rich and everybody else. you remember the occupy wall street movement came up with a

1% and the 99%, and they were onto something there. as it turns out, particularly since the great recession of 2008-2009, he bought the very top of the income curve have done great -- people at the top of the very income curve have done great, certainly better than the average person and poor people. i personally feel that this is one of the reasons donald trump won. people haveot of the reat re -- great recession. he caught a problem bothering americans, the inequality of wealth and income. used to be the rich and the poor. today, there are the very rich and everybody else. you remember the occupy wall street movement came up with a 1% and 99%, and they were onto something. as it turns out, particularly since the great recession of 2008 in 2009, people at the very top of the income curve have done great. they are much richer than average people, and certainly than poor people who have not done very well since the end of the great recession. i personally feel this is one of the reasons donald trump won, a lot of people have not done well

since the great recession. you can look at a few people who have really made out. john f. kennedy said, a rising tide lifts all boats. a rising economy is good for everybody. today, the joke is a rising tide lifts all yachts. if you are not rich enough to afford a yacht, you are not making out today. host: you write about a tiny country that used to be under the soviet socialist republic, estonia. guest: estonia got free of the soviet union in 1991. they had no capital investment, basically no industry. almost everyone was equally poor, and they were looking for a way to jolt their economy, and they were the first of the eastern european countries to do the steve forbes flat tax. they put in a 26% tax, now 19%, and it worked. rich investors in finland, sweden, denmark, germany, came to estonia and invested because they want to take advantage of the low tax rate. it was great for estonia, and as i said, many other eastern countries copied it. now it is not working that well for estonia. they have this huge of social security tax to make up for the lost revenue from the flat tax. the economist i talked to all said, why don't we just have a graduated tax like everybody

else? the estonian government feels like it is their trademark in the world. so they don't want to give it up. host: as you know, a lot of countries have single-payer or government run health service. you wrote all about that. and most of the countries, 175 out of 220, whatever it is, have the vat tax. united states has the highest corporate tax at 35%. what is it about as that we think we are so much smarter than other countries? guest: in many ways, we are. i think american exceptionalism, i understand it because we are the strongest, richest, freest, most innovative country in the world. there is a lot for americans to be proud of. i was a foreign correspondent for many years. when you are here, you can see the problems we have, but you get 10,000 miles away, and united states looks pretty great. so, i totally buy american exceptionalism. there are things we do better than anybody else, but the problem is when we do things worse, we don't want to fix it, because that is the american way. so, 30 million people uninsured in the world's richest country -- terrible, a national disgrace, but it is the american way.

and having a tax code that is the most complicated in the world, that forces people to work more than anybody else, it is nuts, but it is what we have always done. and i think that is why it is hard to change. host: humorist john oliver talked about tax recently on hbo. here he is. [video clip] >> under federal tax law, you must declare income even if the source is illegal. [laughter] >> the tax code has provisions like, if you receive a bribe, include it in your income, and if you steal property, you must report it market value. which seems a such an obvious trap to catch criminals, it should really be listed on the form as -- this is a trap, are you really this stupid, you are filling out the form admitting guilt, you idiot. [end video clip]

host: is that true? guest: it is true that if you have income it is taxable. i don't know that anybody reports it, and if you did, they probably could not convict you, a fifth amendment violation. but the principle is right. if you have income, you owe some of it to the government. people complain, why do i have to pay? well, how did you get to work today? did you build the street? the government did that. who puts out the fire when your house catches on fire? we get benefit from taxes and people ought to pay them. the principle is right. he's right, that application is pretty stupid, but in principle, the irs is right on this one. host: did you visit our internal revenue service? guest: i did. the current commissioner is an old colleague of mine. he and i were lawyers together 30-40 years ago. i have spent a lot of time with this wonderful woman, nina olson. have you ever heard of her? host: we have had her on here many times. guest: she is great, the taxpayer advocate.

her job in the irs is to stand up for poor, bewildered taxpayers who are stuck with these incredibly complex forms. i went to her once and said -- there is a point in my book where i need to find an irs instruction that is so complicated, it is funny. she says, there are so many. i put four of them in the book. i think nina is great, and she told me she has been assigned by congress to report to congress every year on the 20 biggest problems facing american taxpayers. she has done this for 13 years. every year, she reports the complexity of our tax code is the worst problem facing american taxpayers. it is even worse compared to other countries, because they have made it easy to pay tax. nina says to me, i tell them every year, and every year they make it worse. host: what is the easiest way of paying taxes you have heard of? guest: in most rich countries today, the irs or revenue agency fills out the form for you. for example, i was in the netherlands on march 31 last year.

april 1 is their tax day. i was with a guy who has a good income, investments, two mortgages. in america, this guy would have to fill out 12 forms. i said, how do you pay your taxes? he says, i'm just going to go on the computer. the government has filled out every line. he just looked to see if the numbers are right. boom, he has filed both his federal and provincial tax. he says to me, i am what you call a republican. i don't really trust government. sometimes i check the numbers. he is getting mad. he says, sometimes you check the numbers, it can take almost half an hour just to pay your taxes. host: how complicated is our tax

code? how many words, how many pages? guest: 73,000 pages. i asked the irs commissioner if anyone has read it all and he laughed. host: how much of it did you read? guest: i read hunks of it. it is impossible to read. there is a point where congress passed a law demanding that the tax code be made simpler. this is called the anti-complexity clause. you know where it is? section 7803, c2b29 of the irs code. that is how they fight complexity in congress. it does not have to be this way. most countries, the government does the work. in japan in mid-march, you get a postcard from the government. it says, we think you earned this much, we withheld this much, we owe you this much back as a refund. we will put it in your bank account. it takes one minute to pay your taxes. i was looking at the system in japan. it is a smart system. we could do it. my friend, my good buddy there was showing me around. i said, in america in april, people spend hours or days

filling in the forms. they say, why would anybody want to do that? nobody would, but we have to. host: how much money do we spend, united states citizens, on having outside firms deal with our tax? guest: a family at the median income, $56,000, averages $360 for tax preparation or software. total, we spend about $10 billion for tax preparation services like h&r block and $2 million on software. this software, you still have to do hours of work. in other countries, filling out a tax return or finding your -- filing your taxes, it takes 10 or 15 minutes and costs zero dollars.

only the united states makes you pay money to pay money to the government. host: in your book, you wrote about california. they have since decided that issue out there? guest: they have a ready return plan, where the government will fill in the form, but it is optional. you can use it or not, and they don't advertise it, so most people don't know. i think only about 90,000 californians used it. those who use it love it. they tried to pass a law making it apply to all taxpayers, and that didn't pass. the tax-preparation industry lobbied against it. host: i want you to see this ad, 2017, speaks for itself. it is about a tax service. [video clip] >> do you have a tax question? >> i have had some unforeseen medical expenses. >> i hope it is not too bad? >> it is pretty bad. anyway, can i get a tax deduction for the hospital bills? >> in your case, yes. you can enter the expenses here. >> aren't you helpful?

it is so difficult to find good help these days. >> but you were the one sitting on the wall. >> did you say something? i thought not. [end video clip] host: some people say that turbotax and h&r block and all these services are so powerful in lobbying, that you will never get this kind of a short tax form here. guest: as a matter fact, intuit who makes turbotax -- those are funny ads -- probably that guy would not get a medical deduction. it has to be a pretty big hunk of your income before you get a deduction. several members of congress continually introduce a bill to have the irs fill out the return. they know most of the numbers for almost all american families, or all the numbers. then when that bill is introduced, h&r block and intuit lobby against it. i think eventually we will do it. if americans knew it could be

easier, they could do it in 15 minutes and say nothing, i think they would demand it. host: what are the chances that the homeowners deduction on mortgage interest will ever be eliminated? guest: that is one of the two most popular deductions, mortgage interest deduction. it should go. it does not make sense. it costs the treasury about $73 billion a year. that is money we could use to treat wounded veterans or cut the deficit, and instead, it goes to mortgage payers, but only one third of homeowners ever take the deduction. the rest of them take the standard deduction. i think i show in my book, without any question, it doesn't enhance homeownership. it is supposed to make greater homeownership. but many countries have gotten rid of the mortgage interest reduction with no drop in homeownership. britain got rid of it over a 10 year period. they have a higher rate of homeownership than we do. we don't need that one.

it is quite expensive. you put these loopholes in there, then you have to raise the rates to bring in the revenue you need. it makes the tax form more complicated and does not serve the purpose. we could get rid of it this way. get rid of all the deductions, all the popular ones and unknown ones, then you can get the rates way down. people say, i need my mortgage interest deduction. you say no, your rate is going to drop from 20% to 8%. people say, i will take that trade-off. host: paul ryan wasn't always speaker of the house. here he is questioning your old friend, john koskinen.

mr. koskinen may not like the fact i called him "old." your longtime friend. here he is. i want you to explain this one. [video clip] >> i'm listening to this testimony. i don't believe it. that is your problem. nobody believes you. >> i have a long career. that is the first time anybody has said they did not believe me. that's fine. we can have a disagreement. i'm willing to stand on our record. clip]ideo guest: congress does not like john koskinen. congress likes to call in the irs and berate their officials. when i was covering congress, they did it every year. i thought it was one of the funniest moments of the year on capitol hill. they berate the irs because the tax code is complicated, but congress wrote it. john koskinen was 78 years old and barack obama had to talk him into taking this job. so guess what? he does not care about snippy young congressman.

i have seen them on the hill. when they complain about some complex section of the code, he says, i did not write it, congressman, that is your work. host: what they were upset about was the lois lerner thing. guest: and the lost emails, which does seem dubious, but i don't think -- why would he lie about it? he was not there when it happened. that. no interest in host: you write in your book about the heritage foundation and the heritage action for america, and i don't -- i looked up center for american progress. heritage on the right, american progress on the left. they have the center for american progress action fund. [chuckling] brian: they are under two different codes of the irs, one pays tax and one doesn't. tell us why. guest: ridiculous. it is because we have a deduction for charitable contributions, and the definition of charitable effort is very wide. it covers think tanks like the heritage fund. you can give money to the heritage foundation that is deductible, but they are not allowed -- in theory, they are not allowed to do political work, so they have a separate arm.

addressit's at the same that they say does their political work. contributions to that one are not tax-deductible. it all gets messed up and confused, and that is how the irs got in trouble, dealing with these groups. they were required by congress to determine whether these groups were doing politics are not, so they asked political questions and congress got mad about it. i think the blame should be placed not on the irs, but on congress for writing a vague law. host: you hear about donors giving lots of money to 501 c-3 tax-deductible groups, then turn around and give money to the 501(c)4. that's not publishable? guest: you can hide your contribution and you don't get a tax deduction, so you give your deduction to the c3 group. they maintain the building, have a staff.

then the c4 can get away with lower contributions. it is a befuddled mess, and it stems from the fact that we give a tax deduction for charitable contributions, and we have defined a charity very broadly. other nations don't do that. most rich countries don't give any deduction for charity. host: why do we? guest: we have done it since 1917. we thought it was a way to encourage people to give to charity, and as i said, americans give more to charity than any other country because we like doing things privately that other countries do through government. but it is really seriously misused. most people who give to charity, who put some money in the plate at church or put in 10 bucks at the soccer team's dinner, they take the itemized deduction. they don't get a deduction for their charitable contribution. it is mainly for the rich.

it is abused particularly by people who give artworks to museums. here's what you do -- you have a painting, you give it to a museum, then you hire an appraiser to say how much it was worth, you can write off the donation. your appraiser and the museum both want a very high number. the museum brags about it, you get a bigger tax deduction. now the irs has to have its own art appraisal department, to see if your private appraisal was right. guess what? 85% of the time, they say the taxpayer appraised too high because he wanted a bigger deduction. we could eliminate this, get rid of the charitable deduction. guess what? people would still give to charity because they want to help others. tax don't do it for the deduction.

host: carried interest. what is carried interest, and how important is this to the tax code? guest: in the 19th century when a clipper ship captain carried cargo across the atlantic ocean, he was paid an interest in the cargo he carried, called carried interest. it is a form of paying people. today, it refers to, if you are running a hedge fund or are an investment banker and you invest your client's money and you are paid for doing this work, the client is at risk. the client took a risk, and we give a break to people who invest in stocks because it is risky. but under this carried interest rule, the investment banker has nothing at risk and gets the same lower rate. the result is, the richest people in america, the top 400 taxpayers making $100 million or more, pay a lower rate of tax than a family making $70,000. you know the bumper sticker -- warren buffett paid a lower tax rate than his secretary? buffett confirms this is

true. that is because of the carried interest rule. no other country has this. but those really rich investment bankers in america have so much clout in congress. i think that one is going to die. donald trump is against it, some republicans are against it, democrats are against it. host: do you want to predict what will happen with the tax code and when? host: do you want to predict what will happen with the tax code and when? guest: yes. i think history repeats itself. i strongly believe this. if you look at the history of our tax code, the federal income tax was created in 1913. in 1922, there was a major tax code written. 30 years later, it was such a mess. there were so many exemptions and credits that dwight d. eisenhower, when he was elected, said, we have got to start over, which they did. that was in 1954. guess what? 30 years later, it was such a

mess that ronald reagan, a republican, and tip o'neill, democrat, agreed they had to start over. that was the internal revenue code of 1986. 1922, 1954, 1986 -- every 32 years, it is such a mess you have to start over. 32 years is up in 2018. i think everybody sees that our tax code is an efficient, -- inefficient, unfair, ridiculously complex. they can all see we have to fix it. the time has come. i say at the end of my book, we need the internal revenue code of 2018. 32-yearld follow the pattern. host: we think that your first appearance on c-span was april 3, 1984. guest: wow. host: you were a young man then, and here you are. [video clip] >> it thrills me every day that somebody is paying me to write. they could pay me more, but i love to do it, and the "washington post" happens to be a paper that pretty much lets you write. people often forget there is a country out there. i think one of my key jobs is to open their eyes and say, there is more going on than is on your small radar screen, as important

as that may be. >> the people who live here in washington and read your paper? >> that is my reader. yeah. clip]ideo host: you live in denver, colorado and you look back at this town and this last election. what is your analysis? guest: i think washington is an island. nobody in washington, d.c. saw donald trump winning. i went to a couple of trump rallies during 2016, and i could see people were really angry at what washington, d.c. has done. their lives are not going well. it is washington's fault or the media's fault or those immigrants' fault. they needed somebody to blame. i don't think anybody in the beltway saw this clearly. in 1984, you were starting c-span, an innovative new idea in television, and c-span wasn't shown in washington, d.c.

the home of congress. so, the political types here did not know the power that your network had around the country. that is what we are talking about. i remember this wonderful moment. there was a famous congressmen, jack kemp, nfl quarterback. he ran for president. he was nationally known. he was in buffalo and someone said to him, mr. kemp, do you know weber? he was a totally unknown backbencher who happened to be on c-span every day. all over america, more people knew weber then jack kemp. there was power to this network you started. host: let me ask you about your dedication. it is in latin? it looks like you are paying some loving tribute to your children. guest: yes. [speaking latin]

remember that?ou t.r.: i remember that -- i will tell you where i got it. i was a latin teacher. i majored in classics. then i took chinese and japanese later, but i was a latin teacher. i went to princeton. there is an arch at princeton that some rich guy gave. it says [speaking latin] "dedicated in love to my mother and son." we, when i was in princeton, it was all-male and women would come for the weekend. we would walk our dates past this arch and they would say, what does that say? i was a latin major, right, so they had to trust me. we told them it said, kiss your date under this arch. [laughter] t.r.: that is how i remember this. in two or three of my books, i have used that format for my dedication. this one is to my son and my daughters. host: where are they?

guest: my son is in cambridge, mass. he teaches at m.i.t. a daughter in san francisco is in business. one daughter is assistant da in manhattan, taking scumbags off the street. host: where did you meet your wife? guest: in front of the white house. i was in the navy during the vietnam war, and there was an antiwar protest. i took my uniform off and went to this protest and met this stunning blonde, and the rest is history. host: why did she take you up on your invitation? guest: i happened to be there, and i met her. host: that's what i mean. guest: i would like to say it was because i was such a dazzling guy, a young naval officer. no, that wasn't it. she was living with another woman who was dating a classmate of mine from college, and it had all been arranged beforehand. that's how it worked. i made a dazzling move on her, but it wasn't that. she was prepared to know me.

host: you look back on this. how many years did take you to travel the world to get this book? guest: this book took me about three and a half years. i told the publisher a year and a half, and i missed two deadlines. we brought it out. it came out first week in april. two days before, donald trump looked in the tv camera and said, now we move on to tax reform. my publishers said, your timing is great. i said, yeah, i planned it this way. but i didn't. host: this is a cliche question, but as you traveled the world and talked about tax, when did you learn things you absolutely knew nothing about and raise your interest? guest: for me, it started with health care. i got so interested in how other countries were doing better than we were.

i thought america was best at everything, and i realized when i look at health care that they were doing better, and we could do better. as i said, if you take a look at our tax code, it is so complicated and so inefficiently run. could you do this better? it turns out, if you start looking, other countries could do it better. i will tell you how i got into this. this is a field called comparative policy analysis. the basic theory is, if your club or company or country has a problem, a good way to solve it is to see what some other club or country has done to fix it. i was a foreign correspondent for the "washington post," and my first assignment was in tokyo. 13 or 14 time zones from washington. i did my work and filed my story before the editors ever came to work. i never talk to them. i loved it, it was great. in that situation, you have to figure out for yourself what you are going to write about.

there are different ways to be a foreign correspondent. some guys love war. my colleague ed cody was based in paris, and he was always reporting from a war. he really liked covering that. some people are into quaint foreigner stories. they eat squid for breakfast or something. i never liked that. i thought i would take a look at what they do that we should borrow. crazyat they do that's that we should never do. that is what i did as a foreign correspondent, trying to do comparative policy analysis, and now i'm writing books about it. host: our guest has been t.r. reid, and the book is "a fine mess: a quest for a simple, fairer, and more efficient tax system." guest: great to be back on c-span. fabulous what you have done with this network. ♪

[captions copyright national cable satellite corp. 2017] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] ♪ announcer: for free transcripts or to give us your comments about this program, visit us at q-and-a.org. "q&a" programs are also available as c-span podcasts. announcer: if you enjoyed this week's "q&a" interview, here are some other programs you might like. our 2009 interview with mr. reid. on his book "the healing of america." economist martin sullivan on how

major companies in the u.s. avoid paying taxes. and author tom fitton's 2016 interview on his book "clean house," on the controversies during president clinton's second term. watch these anytime or search our video library at c-span.org. announcer: c-span's washington journal, life every day with news and policy issues that impact you. morning, aonday discussion on a new reporting project "trump's america." john socko, special inspector general for of -- afghanistan discusses his latest report on reconstruction country.in that be sure to watch washington journal live monday morning at 7:00 a.m. eastern. join the discussion.

>> monday, a discussion on finding the solutions to global poverty. chelsea at 1:00 p.m. eastern on c-span two. never let anyone define you. and that is the first lesson i want to leave you with. only you define who you are. only you. >> our hearts should be open. not just to falling in love that to the world. we need to look. we need to care. and we need to contribute. >> do not ever let anyone tell you that your dreams are silly. if you have to look back on your life, regret the things that you did and not what you did not do. >> nothing stays still. things will change.

whethertion for you is and how you will participate in the process of creating change. pastst of a few commencement speeches from the c-span video library. watch more commencement speeches on saturday, monday, memorial day, and june 3 on c-span and c-span.org. the british parliament is in recess until after the june 8 elections. prime minister's questions will not be seen tonight. on tuesday, jeremy corbyn officially launched at his party's election campaign. this is 45 minutes. a campaign event. this is 45 minutes. [applause] can i say first of all, they accuse so much to everyone