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 credit. Tax credits such as 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 kid deduction the max of three small. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for educational costs and interest on student education loans. It is effective for federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the associated with producing solutions. The cost of labor is mainly the repair of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 1980s salary 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 All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn using the investment market. The stock and bond markets have no equivalent into the real estate’s 1031 exchange. The 1031 real estate exemption adds stability into the real estate market allowing accumulated equity to be utilized for further investment.
(Notes)
GDP and Taxes. Taxes can be levied as a percentage of GDP. Quicker GDP grows the more government’s capability to tax. Due to the 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 without a massive increase in tax gains. The only way you can to increase taxes through using encourage an enormous increase in GDP.
Encouraging Domestic Investment. During the 1950-60s taxes rates approached 90% to find income earners. The tax code literally forced huge salary 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 come up with tax revenue from the guts 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 Online GST registration in Mumbai Maharashtra the expense of the US current economic crisis. Consumption tax polices beginning inside the 1980s produced a massive increase in the 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 of 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 duty. Except for making up investment profits which are taxed at capital gains rate which reduces annually based using a length of time capital is invested amount of forms can be reduced any couple of pages.