LINBECK: At the practical level it would create so much more power in the hands of the individual wage earner than they presently have. If you’re fortunate enough to live off of dividends or interest, you have a measure of control – even though you pay taxes – you decide through the manner in which you operate, to pay it quarterly. You get everything you earn in that dividend or in that interest payment. The wage earner doesn’t. They work 8 to 5 or 8 to 4:30 and they get a paycheck that’s been diluted at least 30 percent, probably 37 percent, and they have to make all of their plans around that net.
Under the FairTax, they take home everything they earn, whatever that is. I can’t say whether they will earn more or less – I don’t know – under the FairTax than they earn now in gross pay because that’s a market function. I suspect some will earn more because their skills, and knowledge, and experience are in shorter supply than others. And to that extent they will earn more than those that have less. But whatever it is they earn, they will get it all. And I think that’s a very empowering phenomena, and I think it changes the context in which they can manage their life. And I think that’s very positive. Again, it puts them on the same playing field as all other citizens, regardless of their source of income. And I think that would be very positive as well.
There are many others. The growth of the economy will accelerate. It will probably double what it is now or more. Interest rates come down, which drives a lot of that growth. It drives home building, it drives the purchase of large consumer durables. It would stimulate exports, which in turn creates more domestic jobs, which in turn creates more opportunity for growth in all sectors of the economy. It’s not perfect, but I believe it to be the optimum system.
Di: How can we present the FairTax as a bipartisan concern when the first thing people see on the Web site is Republican sponsors?
Leo Linbeck: It gets back to the grass roots again. I hate to, in a sense, to keep coming back to that but that is in fact the core strength of this effort. The reason that there are no Democratic co-sponsors on the current bill as opposed to when it was originally introduced is that the leadership in the House has put out a dictum to the members on the Democratic side that they are not to be co-sponsors.
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In my opinion, the leadership of the Democratic party in the House is making a mistake because it’s been observed by many people, including some of the advisors to the Democratic party, that they’re making a mistake by not embracing the FairTax since it is most supportive of and helpful to the people who work for wages by virtue of the fact that it eliminates the payroll tax, which is the largest tax most wage earners pay and for the first time provides an opportunity for the person who works for wages to get their whole paycheck – whatever their earnings are they’re able to receive that in their take-home pay.
So I don’t think it is of any value, at least I’ve not found it to be of any value, and I’ve met with Nancy Pelosi on two or three occasions. I know her personally, socially and I got nowhere because it is the party line in the House that caused Collin Peterson to get off the bill. There have been others who were inclined to get on it from the group lovingly called the Blue Dog Democrats but they have been dissuaded from doing so by the discipline that’s imposed by the minority leader in the House.