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 with regard to example those for race horses benefit the few at the expense among the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction to be able to max of three of their own kids. 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, the uk will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for expenses and interest on student loans. It is advantageous for federal government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the cost of producing wares. The cost at work is partly the repair of ones very well being.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior for the 1980s the income tax code was investment oriented. Today it is consumption driven. 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 All investment in stocks and bonds always be deductable only taxed when money is withdrawn from the investment market. The stock and bond markets have no equivalent towards the real estate’s 1031 flow. The 1031 real estate exemption adds stability to your real estate market allowing accumulated equity to be used for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied for 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 in difficulty there does not way the us will survive economically with no massive craze of tax revenues. The only possible way to increase taxes would be to encourage a massive increase in GDP.
Encouraging Domestic Investment. Your 1950-60s income tax rates approached 90% for top level Efile Income Tax Return India earners. The tax code literally forced financial security 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 developed the tax revenue from the very center class far offset the deductions by high income earners.
Today much of the freed income contrary to the upper income earner has left the country for investments in China and the EU at the expense with the US economy. Consumption tax polices beginning in the 1980s produced a massive increase a 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 from the US and reducing the tax base at a period when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income duty. Except for making up investment profits which are taxed on the capital gains rate which reduces annually based upon the length of time capital is invested variety of forms can be reduced using a couple of pages.