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 credits. Tax credits such as those for race horses benefit the few in the expense among the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a kid deduction the max of three children. The country is full, encouraging large families is overlook.
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 will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for expenses and interest on student education loans. It is advantageous for brand new to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the cost of producing solutions. The cost of training is mainly the maintenance of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s salary 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 All investment in stocks and bonds always be deductable only taxed when money is withdrawn out from the investment markets. The stock and bond markets have no equivalent to the real estate’s 1031 pass on. The 1031 real estate exemption adds stability on the real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied as being a percentage of GDP. Quicker GDP grows the greater the government’s option to tax. More efficient stagnate economy and the exporting of jobs along with the massive increase in the red there is very little way us states will survive economically any massive development of tax proceeds. The only possible way to increase taxes end up being encourage a tremendous increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s taxes rates approached 90% to your advantage 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 twin impact of accelerating 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 efile Income Tax India earners.
Today via a tunnel the freed income off the upper income earner leaves the country for investments in China and the EU in the expense with the US current economic crisis. Consumption tax polices beginning planet 1980s produced a massive increase planet demand for brand name items. Unfortunately those high luxury goods were frequently 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 time full when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for making up investment profits which are taxed at capital gains rate which reduces annually based on the length of time capital is invested the number of forms can be reduced any couple of pages.