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 loans. Tax credits pertaining to instance those for race horses benefit the few at the expense belonging to the many.
Eliminate deductions of charitable contributions. Is included in a 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 carry.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. ITR Return in India the event the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for education costs and interest on student loan. It is advantageous for the government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing materials. The cost of labor is in part the maintenance of ones nicely.
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 concentrated. A consumption oriented economy degrades domestic economic health while subsidizing US trading spouse. 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 All investment in stocks and bonds ought to deductable and only taxed when money is withdrawn over investment markets. The stock and bond markets have no equivalent on the real estate’s 1031 give eachother. The 1031 marketplace exemption adds stability for the real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can only be levied for a percentage of GDP. The faster GDP grows the more government’s option to tax. Within the stagnate economy and the exporting of jobs along with the massive increase in debt there is very little way us states will survive economically your massive craze of tax proceeds. The only way you can to increase taxes is to encourage an enormous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s tax rates approached 90% for top level 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 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 via a tunnel the freed income contrary to the upper income earner leaves the country for investments in China and the EU in the expense with the US method. Consumption tax polices beginning inside the 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector of the US and reducing the tax base at a period of time when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for accounting for investment profits which are taxed from a capital gains rate which reduces annually based using a length associated with your capital is invested the amount of forms can be reduced any couple of pages.