The economic stimulus package has passed the House and Senate. It has been signed by the President. That will mean that people that pay taxes will get $600 per person and $300 per child. That will mean my family will get $1500. That is a big sum for me. In the big scheme of things, it is hardly a drop in the bucket. But, we are remodeling our house and every penny counts at a time like that.

The stimulus plan is not really a stimulus plan. It is only a stimulus plan if you are a politician up for re-election. To really stimulate the economy, you would need to provide long-term relief, not this one time shot. This one time shot will help the economy, but not very much. Overall, the impact will be minimal at best.

The best way to stimulate the economy is to get the brakes off of it. The brakes are taxes. Taxes need to be reduced and they need to be such that a company can count on the taxes being so much. The best tax plan I have heard of is the Fair Tax. It taxes all the taxes we now pay and put it into a consumption tax.

The value of the tax has been determined to be 23% to replace the taxes that are currently being raised. This tax is embedded in the cost of the item. It is not added on at the register like the local taxes currently paid. The current taxes paid on an item will mean that a $100 item now; will be $100 after the Fair Tax is implemented. Critics of the Fair Tax will try to add the 23% tax to the cost of the item and then claim it is 30%. That is incorrect. The 23% is added before the person makes the purchase, so the price they see on the price tag is the price they pay.

The same kind of thing will happen with people’s paychecks. If they are to be paid $4000/month, they will receive $4000/month in their checks. They will not have any money taken out for Social Security or Federal Taxes. This is a real blessing for the wage earner. My kids are always amazed at how little they get after being paid.

One other benefit is that every family will receive a check each month from the Government to defray the cost of what they will have to purchase that month. If they purchase more than that amount, they will pay the Fair Tax. If they pay less than that amount, they can put that money in the bank. This is a blessing for those on low incomes. They will not be forced to really feel the impact of the Fair Tax. Only those that are wealthy will pay the Fair Tax. Because the more you buy, the more tax you pay.

It will help the economy because tax bookkeeping will go down to almost zero. That will cause companies that moved overseas to move back to the US. The US would have the lowest tax rate of any country in the world. That will cause investment in the US. All that investment will mean more jobs for Americans. As a result, the American economy will be on a boom that will last for decades. The President and Congress that were in office when the Fair Tax was adopted would be considered heroes by future generations of wealthy Americans.

What will cause the Fair Tax to have problems being adopted is the fact that once adopted the Congress can no longer play God with the tax code. Right now, the tax code changes when a special interest group wants a favor. They get the tax code written to benefit themselves and American behavior changes. That would all end when the Fair Tax is adopted because messing with the tax code would only mean changing the percentage. It would not result in changes in American behavior like the current system. The current one tries to reward good behavior and punish bad behavior. Good and bad are defined by the current Congress and the special interest groups that want attention.

The Republican Party needs to get behind something like the Fair Tax. The current tax code is killing the country. Supporting something like the Fair Tax would get people to discuss taxes. Nobody likes taxes, yet they need to be discussed. The Fair Tax is radical enough to catch the attention of the American people. Right now, politicians are having a hard time avoiding the Fair Tax. They are trying to stop this push for the Fair Tax by telling stories that are not true. All of this is a good sign for the adoption of the Fair Tax. It means that Congressmen have to deal with the issue. They will be forced to do something about the Fair Tax in the next few years. Then we will see where the chips fall.