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 loans. Tax credits such as those for race horses benefit the few at the expense for this many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to be able to max of three the children. The country is full, encouraging large families is overlook.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. When 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 the construction industry.
Allow deductions for educational costs and interest on student education loans. It is advantageous for the government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the cost of producing goods. The cost of labor is simply the upkeep of ones nicely.
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 concentrated. 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 All investment in stocks and bonds ought to deductable only taxed when money is withdrawn over investment niches. The stock and bond markets have no equivalent to the real estate’s 1031 give eachother. The 1031 marketplace exemption adds stability into the real estate market allowing accumulated equity to be taken for further investment.
(Notes)
GDP and Taxes. Taxes can be levied as a percentage of GDP. The faster GDP grows the greater the government’s ability to tax. More efficient stagnate economy and the exporting of jobs along with the massive increase in difficulty there does not way united states will survive economically your massive development of tax revenues. The only possible way to increase taxes is encourage huge increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s Income Tax Rates India tax rates approached 90% for the top 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 dual impact of skyrocketing GDP while providing jobs for the growing middle-class. As jobs were came up with tax revenue from the guts class far offset the deductions by high income earners.
Today via a tunnel the freed income from the upper income earner has left the country for investments in China and the EU in the expense among the US financial system. Consumption tax polices beginning planet 1980s produced a massive increase planet 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 from 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 in a very capital gains rate which reduces annually based with a length of your capital is invested quantity of forms can be reduced any couple of pages.