Primary Principle – Taxes should be used primarily to fund government operations and not for economic incentives. Too often tax credits have unintended consequences and fail to stimulate the economy.
Personal Income Tax
Eliminate AMT and all tax attributes. Tax credits pertaining to instance those for race horses benefit the few in the expense for this many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction to a max of three small. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for education costs and interest on student loans. It is effective for federal government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing goods. The cost on the job is partially the repair off ones very well being.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s earnings efile Tax Return India code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading partners. The stagnating economy and the ballooning trade deficit are symptoms of consumption tax policies.
Eliminate 401K and IRA programs. All investment in stocks and bonds should be deductable only taxed when money is withdrawn among the investment niches. The stock and bond markets have no equivalent into the real estate’s 1031 flow. The 1031 property exemption adds stability into the real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can only be levied as the percentage of GDP. Quicker GDP grows the greater the government’s chance to tax. More efficient stagnate economy and the exporting of jobs along with the massive increase with debt there is very little way the states will survive economically without a massive trend of tax earnings. The only way possible to increase taxes through using encourage a massive increase in GDP.
Encouraging Domestic Investment. Your 1950-60s income tax rates approached 90% for the top income earners. The tax code literally forced great living earners to “Invest in America”. Such policies of deductions for pre paid interest, funding limited partnerships and other investments against earned income had the dual impact of growing GDP while providing jobs for the growing middle class. As jobs were created the tax revenue from the center class far offset the deductions by high income earners.
Today lots of the freed income around the upper income earner leaves the country for investments in China and the EU at the expense of the US current economic crisis. Consumption tax polices beginning inside the 1980s produced a massive increase regarding demand for brand name items. Unfortunately those high luxury goods were constantly manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector of the US and reducing the tax base at an occasion when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income duty. Except for comprising investment profits which are taxed from a capital gains rate which reduces annually based using a length of your capital is invested quantity of forms can be reduced to a couple of pages.