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 loans. Tax credits pertaining to instance those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce your son or daughter 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. 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 market industry.
Allow deductions for education costs and interest on student loans. It is advantageous 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 on the job is partly 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 earnings tax code was investment oriented. Today it is consumption oriented. A consumption oriented economy degrades domestic economic health while subsidizing US trading friends. 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 All investment in stocks and bonds ought to deductable just taxed when money is withdrawn from the investment areas. The stock and bond markets have no equivalent into the real estate’s 1031 trading. The 1031 marketplace exemption adds stability for the real estate market allowing accumulated equity to supply for further investment.
(Notes)
GDP and Taxes. Taxes can simply be levied as being a percentage of GDP. The faster GDP grows the greater the government’s capacity to tax. Given the stagnate economy and the exporting of jobs along with the massive increase in debt there is no way the states will survive economically your massive increase in tax profits. The only possible way to increase taxes is to encourage an enormous increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s income tax rates approached 90% for top level income earners. The tax code literally forced high efile Income Tax Return India 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 come up with the tax revenue from the guts class far offset the deductions by high income earners.
Today much of the freed income contrary to the upper income earner leaves the country for investments in China and the EU at the expense among the US financial system. Consumption tax polices beginning in the 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 India blighting the manufacturing sector in the US and reducing the tax base at a time when debt and an ageing 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.