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 loans. Tax credits with regard to example those for race horses benefit the few at the expense for this many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a kid deduction in order to some max of three small. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. When 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 durable industry.
Allow deductions for education costs and interest on so to speak .. It is advantageous for the government 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 partially 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 into the 1980s salary tax code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading young 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 All investment in stocks and bonds in order to deductable just taxed when money is withdrawn among the investment areas. The stock and bond markets have no equivalent for the real estate’s 1031 exchange. The 1031 marketplace exemption adds stability to your real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can be levied as being a percentage of GDP. The faster GDP grows the greater the government’s chance to tax. Due to the stagnate economy and the exporting of jobs coupled with the massive increase with debt there is limited way the us will survive economically any massive increase in tax earnings. The only way possible to increase taxes through using encourage a tremendous increase in GDP.
Encouraging Domestic Investment. Your 1950-60s taxes rates approached 90% for top income earners. The tax code literally forced high income 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 growing GDP while providing jobs for the growing middle class. As jobs were come up with the tax revenue from the guts class far offset the deductions by high income earners.
Today lots of the freed income from the upper income earner leaves the country for investments in China and the EU at the expense for the US financial system. Consumption tax polices beginning globe 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were frequently manufactured off shore. Today capital is fleeing to China and ITR Return File India blighting the manufacturing sector among the US and reducing the tax base at a period when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income duty. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based upon the length of your capital is invested the number of forms can be reduced any couple of pages.