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 because those for race horses benefit the few in the expense belonging to the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to a max of three small. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, a rural area will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for education costs and interest on so to speak .. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the cost of producing everything. The cost on the job is simply the upkeep of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 1980s salary tax code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading spouse. The stagnating economy and the ballooning trade deficit are symptoms e file of Income Tax Return in India consumption tax policies.
Eliminate 401K and IRA programs. All investment in stocks and bonds should be deductable in support taxed when money is withdrawn over investment niches. The stock and bond markets have no equivalent towards the real estate’s 1031 exchange. The 1031 real estate exemption adds stability to the real estate market allowing accumulated equity to be used for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied being a percentage of GDP. Quicker GDP grows the greater the government’s ability to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase with debt there is no way the us will survive economically any massive craze of tax proceeds. The only possible way to increase taxes is encourage a tremendous increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% for the 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 twin impact of skyrocketing GDP while providing jobs for the growing middle class. As jobs were developed the tax revenue from the center class far offset the deductions by high income earners.
Today much of the freed income out of your upper income earner has left the country for investments in China and the EU in the expense with the US method. Consumption tax polices beginning planet 1980s produced a massive increase in the 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 among the US and reducing the tax base at a period when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for comprising investment profits which are taxed on the capital gains rate which reduces annually based using a length of capital is invested variety of forms can be reduced to a couple of pages.