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 credit. Tax credits such as those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a kid deduction to a max of three the children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for expenses and interest on student loan. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing materials. The cost at work is mainly the maintenance of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s revenue tax code was investment oriented. Today it is consumption driven. A consumption oriented economy degrades domestic economic health while subsidizing US trading friends. 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 All investment in stocks and bonds should be deductable and only taxed when money is withdrawn among the investment niches. The stock and bond markets have no equivalent for the real estate’s 1031 pass on. The 1031 property exemption adds stability to your real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can be levied as a percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Because of stagnate economy and the exporting of jobs along with the massive increase in the red there is very little way the states will survive economically any massive take up tax revenues. The only possible way to increase taxes is to encourage a massive increase in GDP.
Encouraging Domestic Investment. During the 1950-60s tax rates approached 90% for the top income tax return India Online 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 twin impact of accelerating GDP while providing jobs for the growing middle class. As jobs were come up with the tax revenue from the middle class far offset the deductions by high income earners.
Today plenty of the freed income contrary to the upper income earner has left the country for investments in China and the EU at the expense of this US economy. Consumption tax polices beginning planet 1980s produced a massive increase regarding demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector in the US and reducing the tax base at a time when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for comprising investment profits which are taxed in a very capital gains rate which reduces annually based with a length associated with your capital is invested the number of forms can be reduced using a couple of pages.