What would be the domestic economic and political implications of Gary Johnson as president?
Firstly, fair tax. One key element of Gary Johnson’s domestic policy is the fair tax. The fair tax is a tax on consumption, not on income or returns from investments. One aspect of the fair tax that I wish to highlight is that there would be no tax on capital gains. Since capital gains are the source of most of the income of the top 15,000 households in the U.S. (taxed at the paltry rate of 15%). No income of any kind would be taxed.
The other aspect of the fair tax is that it is neither a regressive nor progressive. For a tax to be a regressive tax, those taxed would pay a larger percentage of their income in taxes the less income they had. The fair tax, though a tax on consumption, is not regressive because there is a monthly prebate equivalent to the poverty level expenditures on essential goods and services. Hence, those at the lowest incomes would pay little or no tax at all. For a tax to be a progressive tax, those taxed would pay a larger percentage of income the more income they received. For example, the most progressive tax in U.S. history (1933-1973) had the highest tax rates on the rich: 70% to 90%, and also the greatest economic growth. Under the fair tax, those who have the highest incomes would pay a smaller percentage of their income in taxes than people who made significantly less. A household with earnings of $2 million a year could live well spending $1 million and pay only 11% in tax.
Secondly, the fair tax would spur job creation. Under many of Johnson’s competitors, there would be a specific job stimulus proposed and paid for by the government. Johnson is adamantly opposed to any such government reach. Jobs, under Johnson’s economic domestic policies, are created by investors and entrepreneurs. As he says of his terms as governor of New Mexico, “the fact is, I can unequivocally say that I did not create a single job while I was governor,” Johnson added. Instead, “we kept government in check, the budget balanced, and the path to growth clear of unnecessary regulatory obstacles.” That is what he would do as president. “My priority was to get government out of the way, keep it out of the way, and allow hard-working New Mexicans, entrepreneurs and businesses to fulfill their potential,” he said. “That’s how government can encourage job growth, and that’s what government needs to do today.
Commentators use two different slogans to describe policies of this sort. JFK used the phrase “a rising tide lifts all boats” and it describes the way Johnson’s job creation program works. As entrepreneurs and businesses create more wealth, they will hire more workers and we will have more jobs. While Johnson supporters may well enjoy the image of boats rising together, there is another phrase used to describe this mode of job growth: “trickle down economics.” In 1896, Democratic presidential candidate William Jennings Bryan made reference to trickle-down theory as follows:
There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.
"Trickle-down economics” is a term in United States politics to refer to the idea that tax breaks to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole. The term isn’t as lovable as the one about boats and tides, but it is no less accurate and is the method of job growth under a Johnson presidency.
Thirdly, democracy. Given that our democracy is already owned and run by the 1%, what would be the impact of a Johnson presidency on the 1%’s stranglehold? At issue is how his fair tax plus his lack of restrictions on campaign contributions would affect this stranglehold.
The concern is that the wealthy, with huge amounts of wealth that will never be taxed (capital gains, for example), will have even more money to purchase our politicians and insure that this nominal democracy remains under their control. Johnson’s rebuttal to this concern is that if we demand transparency in reporting contributions, the voters will know which candidates have been effectively purchased by which corporations or wealthy individuals. But would this solve the problem?
We already know that our candidates are owned and purchased by various wealthy people and corporations. We knew that Bush and Cheney were owned by the oligarchy, as Amy Goodman called it. Both Obama and Romney are fully funded by corporations — financial, pharmaceutical, insurance, oil and gas companies — and we citizens know it. That has made little difference to most voters and it’s implausible that transparency, which would only put footnotes on what we already know, would make any significant difference. Under a Johnson presidency, the control of the wealthy over our government will only be more entrenched.
The extremely wealthy would be very comfortable under a Johnson presidency. They would pay much less in taxes than moderately well-off middle class citizens. They would be secure in the knowledge that they had full control over our nominal democracy. When they needed more employees or to expand, they would create jobs.