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 snack bars. Tax credits because those for race horses benefit the few at the expense for this many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce a child deduction the max of three small. The country is full, encouraging large families is carry.
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, a rural area will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for educational costs and interest on student loan. It pays to for federal government to encourage education.
Allow 100% deduction e file of Income Tax India medical costs and insurance policy. In business one deducts the cost of producing materials. The cost on the job is simply the repair of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior for the 1980s salary 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 All investment in stocks and bonds should be deductable just taxed when money is withdrawn over investment advertises. The stock and bond markets have no equivalent for the real estate’s 1031 pass on. The 1031 real estate exemption adds stability into the real estate market allowing accumulated equity to be taken for further investment.
GDP and Taxes. Taxes can only be levied as the percentage of GDP. Quicker GDP grows the greater the government’s ability to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase in the red there is very little way the us will survive economically any massive craze of tax proceeds. The only possible way to increase taxes is encourage an enormous increase in GDP.
Encouraging Domestic Investment. Your 1950-60s taxes rates approached 90% for top 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 twin impact of growing GDP while providing jobs for the growing middle class. As jobs were developed the tax revenue from the center class far offset the deductions by high income earners.
Today via a tunnel the freed income out of your upper income earner leaves the country for investments in China and the EU at the expense of this US financial system. Consumption tax polices beginning globe 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector among the US and reducing the tax base at an occasion when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for comprising investment profits which are taxed on the capital gains rate which reduces annually based around the length of time capital is invested the number of forms can be reduced along with couple of pages.