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 credit. Tax credits pertaining to instance those for race horses benefit the few at the expense for this many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to a max of three of their own kids. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for expenses and interest on student education loans. It is advantageous for federal government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the cost of producing solutions. The cost of labor is partially the repair of ones nicely.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to the 1980s the income tax code was investment oriented. Today it is consumption driven. A consumption oriented economy degrades domestic economic health while subsidizing US trading young 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 All investment in stocks and bonds always be deductable just taxed when money is withdrawn using the investment niches. The stock and bond markets have no equivalent on the real estate’s 1031 pass on. The 1031 real estate exemption adds stability into the real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can fundamentally 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 debt there is limited way the usa will survive economically with no massive take up tax revenues. The only possible way to increase taxes end up being encourage a massive increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s taxes rates approached 90% to your advantage efile Income Tax Return India 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 accelerating GDP while providing jobs for the growing middle-class. As jobs were come up with tax revenue from the very center class far offset the deductions by high income earners.
Today much of the freed income from the upper income earner has left the country for investments in China and the EU in the expense of the US economy. Consumption tax polices beginning planet 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 among 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 tax. Except for comprising investment profits which are taxed from a capital gains rate which reduces annually based upon the length of energy capital is invested the amount of forms can be reduced using a couple of pages.