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 at the expense belonging to the many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce a child deduction to a max of three children. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for education costs and interest on student education loans. It is advantageous 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 on the job is partly the maintenance of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to the 1980s earnings tax code was investment oriented. Today it is consumption driven. 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 Online Tax Return Filing India policies.
Eliminate 401K and IRA programs. All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn over investment advertises. The stock and bond markets have no equivalent towards the real estate’s 1031 exchange. The 1031 industry exemption adds stability to the real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can simply be levied for a percentage of GDP. The faster GDP grows the greater the government’s capability to tax. More efficient stagnate economy and the exporting of jobs coupled with the massive increase in the red there is limited way the usa will survive economically without a massive take up tax revenues. The only way you can to increase taxes is to encourage a massive increase in GDP.
Encouraging Domestic Investment. Within 1950-60s tax rates approached 90% for top 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 come up with tax revenue from the guts class far offset the deductions by high income earners.
Today lots of the freed income out of your upper income earner has left the country for investments in China and the EU in the expense of this US current economic crisis. Consumption tax polices beginning inside the 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 in 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 duty. Except for accounting for investment profits which are taxed at capital gains rate which reduces annually based with a length of your capital is invested variety of forms can be reduced to a couple of pages.