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 pertaining to instance those for race horses benefit the few at the expense of the 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 of their own kids. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. In case the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for expenses and interest on student education loans. It pays to for federal government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing materials. The cost of labor is mainly the maintenance of ones very well being.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to the 1980s salary tax code was investment oriented. Today it is consumption concentrated. A consumption oriented economy degrades domestic economic health while subsidizing US trading 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 All investment in stocks and bonds always be deductable merely taxed when money is withdrawn over investment markets. The stock and bond markets have no equivalent on the real estate’s 1031 pass on. The 1031 property exemption adds stability to the real estate market allowing accumulated equity to be taken for further investment.
GDP and Taxes. Taxes can be levied for a percentage of GDP. Quicker GDP grows the greater the government’s ability to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase in difficulty there does not way the us will survive economically any massive trend of tax gains. The only possible way to increase taxes is encourage an enormous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s tax rates approached 90% to your advantage income earners. The tax code literally forced financial security 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 skyrocketing GDP while providing jobs for the growing middle-class. As jobs were come up with tax revenue from the guts class far offset the deductions by high income earners.
Today via a tunnel the freed income around the upper income earner has left the country for investments in China and the EU ITR Return in India the expense among the US financial system. Consumption tax polices beginning inside the 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 from the US and reducing the tax base at a period of time when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for accounting for investment profits which are taxed in a very capital gains rate which reduces annually based on the length of your capital is invested the amount of forms can be reduced to a couple of pages.