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 such as those for race horses benefit the few in the expense for this many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the child deduction to be able to max of three the children. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Buying a home 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 structure industry.
Allow deductions for education costs and interest on student education loans. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the associated with producing wares. The cost of labor is simply the maintenance of ones nicely.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s revenue 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 All investment in stocks and bonds always be deductable in support taxed when money is withdrawn from the investment niches. The stock and bond markets have no equivalent into the real estate’s 1031 pass on. The 1031 real estate exemption adds stability for the real estate market allowing accumulated equity to be used for further investment.
(Notes)
GDP and Taxes. Taxes can simply be levied for a percentage of GDP. Quicker GDP grows the more 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 united states will survive economically with no massive trend e file of Income Tax Return In India tax revenues. The only possible way to increase taxes is to encourage a massive increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% for top income earners. The tax code literally forced great 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 dual impact of skyrocketing 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 plenty of the freed income off the upper income earner leaves the country for investments in China and the EU in the expense for the US method. Consumption tax polices beginning regarding 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were more often than not manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector belonging to the US and reducing the tax base at a period of time when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for accounting for investment profits which are taxed at a capital gains rate which reduces annually based around the length associated with your capital is invested variety of forms can be reduced to a couple of pages.