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 attributes. 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 the child deduction the max of three the children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. In case 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 structure industry.
Allow deductions for education costs and interest on student loans. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing everything. The cost of labor is mainly the upkeep of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to 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 collaborators. 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 All investment in stocks and bonds in order to deductable in support taxed when money is withdrawn out from the investment markets. The stock and bond markets have no equivalent into the real estate’s 1031 flow. The 1031 real estate exemption adds stability on the real estate market allowing accumulated equity to supply for further investment.
(Notes)
GDP and Taxes. Taxes can only be levied as being a percentage of GDP. Quicker GDP grows the more government’s capability to tax. More efficient stagnate economy and the exporting of jobs along with the massive increase in the red there is very little way the usa will survive economically any massive craze of tax proceeds. The only way you can to increase taxes is encourage a massive increase in GDP.
Encouraging Domestic Investment. Within 1950-60s income tax rates approached 90% to find 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 twin impact of skyrocketing GDP while providing jobs for the growing middle class. As jobs were developed the tax revenue from the middle class far offset the deductions by high income earners.
Today much of the freed income contrary to the upper income earner leaves the country for investments in China and the EU in the expense for the US current economic crisis. Consumption tax polices beginning regarding 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 in the US and reducing the tax base at a period of time when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for accounting for investment profits which are taxed in a very capital gains rate which reduces annually based upon the length associated with your capital is invested the amount of forms can be reduced any couple e file of Income Tax India pages.