Primary Principle – Taxes should be used primarily to fund government operations and not for economic incentives. Too often breaks have unintended consequences and fail to stimulate the economy.
Personal Income Tax
Eliminate AMT and all tax credits. Tax credits while those for race horses benefit the few at the expense of the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce the child deduction to be able to max of three the children. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for educational costs and interest on figuratively speaking. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the price producing everything. The cost of employment is partly the repair off ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s salary tax code was investment oriented. Today it is consumption concentrated. A consumption oriented economy degrades domestic economic health while subsidizing US trading collaborators. 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 All investment in stocks and bonds in order to deductable just taxed when money is withdrawn from the investment markets. The stock and bond markets have no equivalent into the real estate’s 1031 trading. The 1031 real estate exemption adds stability to the real estate market allowing accumulated equity to be used for further investment.
GDP and Taxes. Taxes can essentially levied as the percentage of GDP. Quicker GDP grows the more government’s capability to tax. Because of stagnate economy and the exporting of jobs along with the massive increase in debt there is limited way the usa will survive economically without a massive craze of tax profits. The only way you can to increase taxes is to encourage an enormous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s income tax rates approached 90% for top income earners. The tax code literally forced huge salary 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 skyrocketing GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the guts class far offset the deductions by high income earners.
Today lots of the freed income off the upper income earner has left 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 inside of the demand for brand name items. Unfortunately those high luxury goods were too often manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector of the US and reducing the tax base at a time when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for comprising investment profits which are taxed at capital gains rate which reduces annually based using a length of time capital is invested the number of forms can be reduced along with couple e file of Income Tax India pages.