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 credits. Tax credits such as those for race horses benefit the few in the expense of the many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce the child deduction the max of three small. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. In the event 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 layout industry.
Allow deductions for expenses and interest on so to speak .. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing wares. The cost of training is partly the repair off ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior for the 1980s revenue tax code was investment oriented. Today it is consumption driven. 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 All investment in stocks and bonds in order to deductable just taxed when money is withdrawn among the investment areas. The stock and bond markets have no equivalent towards the real estate’s 1031 give eachother. The 1031 marketplace exemption adds stability to the real estate market allowing accumulated equity to be taken for further investment.
(Notes)
GDP and Taxes. Taxes can be levied as being a percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase in the red there does not way us states will survive economically with massive development of tax profits. The only way you can to increase taxes would be to encourage an enormous increase in GDP.
Encouraging Domestic Investment. Your 1950-60s income tax rates approached 90% for the top efile Income Tax Return in India 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 twin impact of skyrocketing GDP while providing jobs for the growing middle-class. As jobs were come up with the tax revenue from the center class far offset the deductions by high income earners.
Today via a tunnel the freed income out of your upper income earner has left the country for investments in China and the EU at the expense with the US current economic crisis. Consumption tax polices beginning globe 1980s produced a massive increase inside of the 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 a maturing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based using a length of your capital is invested variety of forms can be reduced along with couple of pages.