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 because those for race horses benefit the few in the expense on the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a child deduction to be able to max of three of their own kids. The country is full, encouraging large families is get.
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, the will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for education costs and interest on student loans. It is advantageous for federal government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the price producing everything. The cost of labor is partly the repair of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 1980s revenue tax code was investment oriented. Today Online IT Return Filing India is consumption focused. 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 All investment in stocks and bonds always be deductable only taxed when money is withdrawn out from the investment advertises. The stock and bond markets have no equivalent for the real estate’s 1031 pass on. The 1031 marketplace exemption adds stability to the real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can essentially levied as a percentage of GDP. Quicker GDP grows the more government’s option to tax. More efficient stagnate economy and the exporting of jobs along with the massive increase in debt there does not way united states will survive economically with massive development of tax revenues. The only possible way to increase taxes is encourage an enormous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s income tax rates approached 90% to your advantage income earners. The tax code literally forced financial security 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 growing 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 plenty of the freed income out of your upper income earner leaves the country for investments in China and the EU at the expense with the US current economic crisis. Consumption tax polices beginning in the 1980s produced a massive increase planet 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 belonging to the US and reducing the tax base at a period when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for making up investment profits which are taxed in a very capital gains rate which reduces annually based using a length of time capital is invested the number of forms can be reduced to a couple of pages.