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 attributes. Tax credits such as those for race horses benefit the few in the expense on the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce a kid deduction to be able to max of three of their own kids. The country is full, encouraging large families is overlook.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of layout 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 cost of producing everything. The cost of employment is simply the maintenance of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on 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 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 All investment in stocks and bonds in order to be deductable merely taxed when money is withdrawn over investment market. The stock and bond markets have no equivalent on the real estate’s 1031 pass on. The 1031 property exemption adds stability for the real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can fundamentally be levied as the percentage of GDP. Quicker GDP grows the more government’s capability to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase in debt there is very little way united states will survive economically with massive development of tax revenues. The only way you can to increase taxes end up being encourage an enormous increase in GDP.
Encouraging Domestic Investment. During the 1950-60s Online Income Tax Return Filing India tax rates approached 90% to your advantage income 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 twin impact of accelerating 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 almost all of the freed income off the upper income earner has left the country for investments in China and the EU at the expense of the US financial system. Consumption tax polices beginning regarding 1980s produced a massive increase in the 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 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 on the capital gains rate which reduces annually based upon the length of time capital is invested the amount of forms can be reduced to a couple of pages.