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.