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 snack bars. Tax credits while those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce your son or daughter 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. Buying strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for expenses and interest on figuratively speaking. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the price producing goods. The cost at work 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 the income tax code was investment oriented. Today it is consumption oriented. 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 All investment in stocks and bonds in order to deductable just taxed when money is withdrawn using the investment markets. The stock and bond markets have no equivalent for the real estate’s 1031 trading. The 1031 real estate exemption adds stability to your real estate market allowing accumulated equity to be used for further investment.
GDP and Taxes. Taxes can simply be levied for a percentage of GDP. Quicker GDP grows the greater the government’s capability to tax. Due to the stagnate economy and the exporting of jobs along with the massive increase in debt there is very little way us states will survive economically without a massive craze of tax proceeds. The only possible way to increase taxes through using encourage an enormous increase in GDP.
Encouraging Domestic Investment. During the 1950-60s tax rates approached 90% for top level 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 very center class far offset the deductions by high income earners.
Today via a tunnel the freed income out of your upper Efile income tax return India earner leaves the country for investments in China and the EU in the expense of the US economy. Consumption tax polices beginning regarding 1980s produced a massive increase planet demand for brand name items. Unfortunately those high luxury goods were frequently 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 aging population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for comprising investment profits which are taxed on the capital gains rate which reduces annually based around the length associated with your capital is invested the amount of forms can be reduced along with couple of pages.