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 credit. Tax credits pertaining to instance those for race horses benefit the few in the expense on the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce a kid deduction in order to some max of three children. 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. If the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for educational costs and interest on student loan. It pays to for the government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing materials. The cost at work is partly the repair off ones nicely.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into 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 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 All investment in stocks and bonds in order to be deductable in support taxed when money is withdrawn out from the investment areas. The stock and bond markets have no equivalent on the real estate’s 1031 pass on. The 1031 marketplace exemption adds stability to the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can fundamentally be levied as the percentage of GDP. The faster GDP grows the greater the government’s capability to tax. Within the stagnate economy and the exporting of jobs along with the massive increase with debt there is very little way united states will survive economically with no massive take up tax revenues. The only way you can to increase taxes is to encourage an enormous increase in GDP.
Encouraging Domestic Investment. During the 1950-60s taxes rates approached 90% for top level income 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 dual impact of skyrocketing 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 earners.
Today much of the freed income around the upper income earner leaves the country for investments in China and the EU in the expense of this US economy. Consumption tax polices beginning regarding 1980s produced a massive increase regarding demand for brand name items. Unfortunately those high luxury goods were constantly manufactured off shore. Today capital is fleeing to China and Online GST Return India blighting the manufacturing sector belonging to the US and reducing the tax base at a time full when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income duty. Except for comprising investment profits which are taxed at a capital gains rate which reduces annually based upon the length associated with your capital is invested the number of forms can be reduced to a couple of pages.