On the eve of the presidential election, New Mexico Gov. Gary Johnson came to Washington, D.C., for the third and final third-party debate to try to convince American voters that he’s the right candidate to take the country away from the political status quo.
Host Carmen Russell-Sluchansky sat down with Johnson in studios to discuss his campaign, the other candidates and the issues facing the country.
I’m Carmen Russell-Sluchansky. I have a very special guest in our studio today – this is Governor Gary Johnson who’s running for president as the Libertarian Party nominee. Governor Johnson, first of all, we actually just broadcast the debate you had with Jill Stein. Great job! It was very lively, very interesting and very informative! Let’s talk a little bit about the tax plan you have. Are you suggesting that we get rid of the entire income tax for corporations and individuals in favor of a universal sales tax?
Yes, but important point out is it would be the only federal tax. I’m embracing the fair tax, for those listening, check it out – fairtax.org. I think it really reboots the American economy for the next hundred years. It ends up being cost-neutral over a short amount of time. It’s really the answer to American exports, because what you’re doing is you’re bleeding all existing non-transparent federal taxes out of goods and services for export. It’s the answer to China. No more withholdings from you payroll check! The revenue for social security, unemployment, medic care would come out of the proceeds of the fair tax. I believe that the private sector would create tens of millions of jobs with a zero corporate tax rate environment. And then something that goes unstated – foreign investment capital which has declined dramatically over the last 8 years. I think you will see six-fold increase in foreign investment capital. And I’m talking about, let’s say, Volvo that wants to expand somewhere on the planet. They’re going to go to the place most favorable to business. Why not make the U.S. the most favorable spot for business? And let’s not forget that corporate taxes in America started out at zero, and now we have currently the second highest corporate tax rate of any of the industrialized countries in the world making us uncompetitive today. There’s a reason why jobs are going elsewhere other than this country.
Does that include the effective tax rate? Because, as I understand, the effective tax rate is actually considerably lower than the 35% corporate tax rate that we see, when you consider loopholes, deductions and that kind of thing.
Loopholes are going away. There’re no more loopholes, there’s no more IRS. There’re no loopholes for sale, which, by the way, is crony capitalism. Individuals, groups, corporations pay for loopholes, pay for special consideration and politicians from both parties sell those special considerations and it’s not fair. So how about creating a system that’s fair? And I’d argue that this’s better, much better than what we currently have. What I’m advocating is one federal consumption tax. Is the fair tax the best way to implement one federal consumption tax? Perhaps, not. But it’s a terrific starting point on what would be debate over radical tax reform that will result in fairness and competitiveness.
Let’s go to the fair tax for a second. Can you talk a little bit in terms of the products on which this applies to? Because, as I understand, sales tax, generally speaking, is a fairly regressive tax. For example, if a family has to buy more milk —-
One of the rightful criticisms of the consumption tax is that it’s regressive. The way the fair tax deals with the regressive nature of the consumption tax is that it issues everyone in the country a 200$ a month rebate check. So you and I would get 2400$ a year from the federal government that would allow us to pay the consumption tax up to the point of the poverty level, kind of unavoidable amount of consumption that we’d have to pay for food, clothing, shelter, transportation. It applies to new goods and services, not used goods and it doesn’t apply to business-to-business transactions. So if I were to use a house, for example. A new home is not going to compound its cost. As it goes forward, the builder is not going to have to pay the consumption tax on wood, on the electrical, the mechanical, the roofing that goes into the home. The consumption tax would apply only to the end product. It ends up being cost-neutral over the very short amount of time. It’s a 23% consumption tax. Let me use the can of Coke as an example. It sells for a dollar today and arguably has 23% non-transparent embedded federal tax! – That’s income tax that Coke has to pay, that’s social security match that Coke has to pay, unemployment, medic care that Coke has to pay! You’re going to take all that out! So Coke will be able to sell that can for 80 cents and be able to make the same amount of profit applying to 23% to the 80 cents. Now they’re still continuing to sell this can for a buck and make that much money, at least when it comes to Coca-Cola – it’s very competitive, unlike health care in this country.
I prefer Pepsi. Sorry, just kidding. Let’s go to medic care and your plan for it. You’re thinking that medic care is one of the necessary government programs, but it belongs more to the states. You’ve mentioned in a couple of debates now that you pay 30,000 into it and you receive 100,000. Does it take into account capitalized interests?
No, it’s just dollars spent. You put in 30 grand, you’re going to get 100,000 dollars back. Whatever you pay, it triples the amount back. All that is not sustainable. As Governor of New Mexico, I oversaw the reform of medic aid in New Mexico, health care for the poor. We took it from a fee service model to manage care model. We saved hundreds of millions of dollars and we set up better health care networks for the poor. If the federal government were to have granted the state of New Mexico 43% less money for medic aid, I believe, if they would have done away with all the strings and the mandates, just given me a fixed amount of money that I’d have been able to draw a new line of eligibility that absolutely would have created a health care safety net for those who are poor, I could have effectively done that. I’d apply that same template to medic care – get the federal government out of the health care delivery business completely – one size doesn’t fit all – do away with all the strings and the mandates, give it up to 50 laboratories of innovation and best practice – and I think that’s exactly what you’d have. You’d have some fabulous success that would get emulated, you would also have some horrible failure that would get avoided. But the notion that Washington top down “one size fits all” works – it doesn’t! And that has us in the predicament that we’re in. Our health care, medic aid, medic care are absolutely not sustainable and the alternative is the collapse to government due to a monetary collapse, due to the fact that we’re printing 43 cents out of every dollar that we’re spending. The alternative is no health care for any of us, because that’s what going to happen when government collapses.
You talk a lot about debt. 43 cents on the dollar that we’re paying in our federal budget basically goes to paying for debt. When the government tries to spend money on stimulus and therefore tries to get the economy going again what they’re doing is trying to create jobs and that creates these cycles.
In this case what government is doing – let’s just take the quantitative easing, we’re in the QE3 right now. What QE3 is all about is the Federal Reserve buying up assets. In this case what assets are they buying? We don’t know. That’s why the audit of the Federal Reserve would be so enlightening! What we think they’re buying are mortgage-backed securities – that’s what they say they’re buying, – they’re also buying stocks, they’re also buying up treasuries. If home match of our own treasuries is our own government buying – it’s like Bernie Madoff with a printing machine. If we had an audit of the Federal Reserve right now what it might reveal is something so startling that we might have a monetary collapse just based on what we find out the Federal Reserve is buying up and how much.
And one last question. Although this country started with no federal income tax and no income tax across the board, some of the better times in this century in terms of when we had a greater surplus and also better economic times with significant income tax. At one point, we had top marginal tax rates at 90% above the million dollars.
Yeah, but nobody paid 90%. You had tax breaks, you had loopholes. Nobody paid 90%, because nobody would have paid it! Everybody would have quit working!
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