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 pertaining to instance 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 your son or daughter deduction to a max of three small. The country is full, encouraging large families is get.
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 E File Of Income Tax Return India foreclosures and interrupt the recovery of layout industry.
Allow deductions for education costs and interest on student education loans. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing everything. The cost of training is partly the repair of ones fitness.
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 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 All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn among the investment market. The stock and bond markets have no equivalent for the real estate’s 1031 exchange. The 1031 industry exemption adds stability on the real estate market allowing accumulated equity to be taken 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. Within the stagnate economy and the exporting of jobs coupled with the massive increase in the red there is very little way united states will survive economically any massive trend of tax proceeds. The only way possible to increase taxes end up being encourage an enormous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s tax rates approached 90% to find income earners. The tax code literally forced comfortable living 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 very center class far offset the deductions by high income earners.
Today plenty of the freed income contrary to 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 planet 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 India blighting the manufacturing sector among the US and reducing the tax base at a time full when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for comprising investment profits which are taxed at capital gains rate which reduces annually based using a length of capital is invested the amount of forms can be reduced to a couple of pages.