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 credits. Tax credits pertaining to instance those for race horses benefit the few at the expense belonging to the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction in order to some max of three of their own kids. The country is full, encouraging large families is overlook.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. In case the mortgage deduction is eliminated, as the President’s council suggests, a rural area will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for education costs and interest on student loan. 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 at work is simply 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 to the 1980s salary Efilie Tax Return India code was investment oriented. Today it is consumption concentrated. 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 All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn over investment market. The stock and bond markets have no equivalent into the real estate’s 1031 trading. The 1031 industry exemption adds stability for the real estate market allowing accumulated equity to supply for further investment.
(Notes)
GDP and Taxes. Taxes can fundamentally be levied as a percentage of GDP. The faster GDP grows the greater the government’s capability to tax. Given the stagnate economy and the exporting of jobs along with the massive increase with debt there is limited way the usa will survive economically without a massive development of tax profits. The only possible way to increase taxes through using encourage huge increase in GDP.
Encouraging Domestic Investment. Your 1950-60s tax rates approached 90% for 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 accelerating 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 almost all of the freed income from the upper income earner leaves the country for investments in China and the EU at the expense of the US economic state. Consumption tax polices beginning inside the 1980s produced a massive increase planet 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 in the US and reducing the tax base at a period of time when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for making up investment profits which are taxed on the capital gains rate which reduces annually based using a length of capital is invested amount of forms can be reduced any couple of pages.