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 attributes. Tax credits because those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to be able to max of three younger children. 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, the uk will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for expenses and interest on student loan. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the associated with producing solutions. The cost of training is simply the maintenance of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s earnings tax code was investment oriented. Today it is consumption oriented. 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 All investment in stocks and bonds in order to be deductable and only taxed when money is withdrawn among the investment areas. The stock and bond markets have no equivalent towards the real estate’s 1031 exchange. The 1031 real estate exemption adds stability on the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can be levied for a percentage of GDP. Quicker GDP grows the more government’s ability to tax. Because of stagnate economy and the exporting of jobs along with the massive increase in debt there isn’t really way us states will survive economically any massive increase in tax profits. The only way you can to increase taxes would be to encourage a tremendous increase in GDP.
Encouraging Domestic Investment. During the 1950-60s taxes 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 twin impact of accelerating GDP while providing jobs for the growing middle class. As jobs were come up with tax revenue from the center class far offset the deductions by high Income Tax Rates India earners.
Today almost all of the freed income from the upper income earner leaves the country for investments in China and the EU at the expense with the US economy. Consumption tax polices beginning planet 1980s produced a massive increase in the demand for brand name items. Unfortunately those high luxury goods were constantly 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 a maturing population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for accounting for investment profits which are taxed on the capital gains rate which reduces annually based around the length of capital is invested variety of forms can be reduced together with a couple of pages.