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 with regard to example those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce the child deduction to a max of three the children. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for educational costs and interest on so to speak .. 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 goods. The cost on the job is partly the repair of ones health.
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 driven. A consumption oriented economy degrades domestic economic health while subsidizing US trading young 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 All investment in stocks and bonds in order to deductable and only taxed when money is withdrawn out from the investment market. The stock and bond markets have no equivalent towards the real estate’s 1031 exchange. The 1031 real estate exemption adds stability on the real estate market allowing accumulated equity to be used for further investment.
GDP and Taxes. Taxes can only be levied for a percentage of GDP. Quicker GDP grows the more government’s capability to tax. Within the stagnate economy and the exporting of jobs along with the massive increase in difficulty there is limited way the states will survive economically your massive craze of tax earnings. The only possible way to increase taxes through using encourage a massive increase in GDP.
Encouraging Domestic Investment. During the 1950-60s tax rates approached 90% for top level efile Income Tax India 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 twin impact of accelerating GDP while providing jobs for the growing middle-class. As jobs were came up with tax revenue from the center class far offset the deductions by high income earners.
Today almost all of the freed income around the upper income earner has left the country for investments in China and the EU at the expense among the US method. Consumption tax polices beginning inside the 1980s produced a massive increase planet 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 belonging to the US and reducing the tax base at a period of time when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for making up investment profits which are taxed at capital gains rate which reduces annually based using a length associated with your capital is invested the number of forms can be reduced along with couple of pages.