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 at the expense of the many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction the max of three children. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. When the 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 student loan. It is advantageous for the government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing wares. The cost of labor is in part the repair off ones very well being.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s salary tax code was investment oriented. Today it is consumption driven. A consumption oriented economy degrades domestic economic health while subsidizing US trading spouse. 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 All investment in stocks and bonds in order to be deductable just taxed when money is withdrawn among the investment areas. The stock and bond markets have no equivalent on the real estate’s 1031 trading. The 1031 property exemption adds stability into the real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can fundamentally be levied as being a percentage of GDP. Quicker GDP grows the more government’s capability to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase with debt there is very little way us states will survive economically your massive trend of tax profits. The only possible way to increase taxes is encourage huge increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s taxes rates approached 90% for top 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 dual impact of accelerating GDP while providing jobs for the growing middle class. As jobs were came up with tax revenue from the guts class far offset the deductions by high income earners.
Today lots of the freed income contrary to the upper Efile income tax return India earner leaves the country for investments in China and the EU at the expense of this US economy. Consumption tax polices beginning in the 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 from the US and reducing the tax base at an occasion when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based using a length associated with your capital is invested quantity of forms can be reduced using a couple of pages.