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 in the expense for this many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce a child deduction to be able to max of three 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. In case the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for expenses and interest on student education loans. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing goods. 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 towards 1980s the Income Tax Rates India tax code was investment oriented. Today it is consumption concentrated. 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 All investment in stocks and bonds should be deductable merely taxed when money is withdrawn from the investment niches. The stock and bond markets have no equivalent into the real estate’s 1031 give eachother. The 1031 property exemption adds stability on the real estate market allowing accumulated equity to be taken for further investment.
GDP and Taxes. Taxes can fundamentally be levied as the percentage of GDP. Quicker GDP grows the more government’s ability to tax. More efficient stagnate economy and the exporting of jobs along with the massive increase in debt there is no way united states will survive economically your massive craze of tax profits. The only possible way to increase taxes end up being encourage a massive increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s tax 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 dual impact of growing GDP while providing jobs for the growing middle class. As jobs were created the tax revenue from the guts class far offset the deductions by high income earners.
Today much of the freed income off the upper income earner has left the country for investments in China and the EU at the expense with the US current economic crisis. Consumption tax polices beginning regarding 1980s produced a massive increase a 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 of the US and reducing the tax base at a time 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 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 using a couple of pages.