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 credit. Tax credits pertaining to instance those for race horses benefit the few in the expense of the many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction in order to some max of three small. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for educational costs and interest on student education loans. It is advantageous for brand new to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing solutions. The cost of employment 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 earnings tax code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading collaborators. 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 All investment in stocks and bonds ought to deductable only taxed when money is withdrawn over investment niches. The stock and bond markets have no equivalent towards the real estate’s 1031 trading. The 1031 property exemption adds stability on the real estate market allowing accumulated equity to supply for further investment.
(Notes)
GDP and Taxes. Taxes can only be levied as the percentage of GDP. The faster 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 does not way the states will survive economically without a massive development of tax proceeds. The only way you can to increase taxes would be to encourage huge increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s tax rates approached 90% for the top Online Income Tax Return Filing India 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 growing GDP while providing jobs for the growing middle-class. As jobs were developed the tax revenue from the guts class far offset the deductions by high income earners.
Today lots 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 economic state. Consumption tax polices beginning globe 1980s produced a massive increase regarding 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 from 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 place a burden on. Except for comprising investment profits which are taxed in a very capital gains rate which reduces annually based upon the length of energy capital is invested quantity of forms can be reduced along with couple of pages.