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 in the expense for this many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction to a max of three of their own kids. 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. When the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for educational costs and interest on student education loans. It pays to for the government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the associated with producing wares. The cost of labor is simply the repair off ones fitness.
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 oriented. A consumption oriented economy degrades domestic economic health while subsidizing US trading 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 All investment in stocks and bonds always be deductable merely taxed when money is withdrawn using the investment advertises. The stock and bond markets have no equivalent to the real estate’s 1031 flow. The 1031 property exemption adds stability to your real estate market allowing accumulated equity to be utilized for further investment.
GDP and Taxes. Taxes can only be levied as being a percentage of GDP. The faster GDP grows the greater the government’s ability to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase in the red there is no way us states will survive economically your massive development of Online Tax Return Filing India gains. The only possible way to increase taxes is to encourage a tremendous increase in GDP.
Encouraging Domestic Investment. Your 1950-60s tax rates approached 90% to find income earners. The tax code literally forced high income 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 very center class far offset the deductions by high income earners.
Today almost all of the freed income contrary to the upper income earner has left the country for investments in China and the EU at the expense for the US economic state. Consumption tax polices beginning regarding 1980s produced a massive increase in the demand for brand name items. Unfortunately those high luxury goods were too often 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 aging population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for accounting for investment profits which are taxed at a capital gains rate which reduces annually based using a length associated with your capital is invested amount of forms can be reduced along with couple of pages.