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 snack bars. Tax credits with regard to example those for race horses benefit the few in the expense of the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a child deduction to be able to max of three the children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. If the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for expenses and interest on student education loans. It pays to for the government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the associated with producing wares. The cost of employment is partially the upkeep of ones health.
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 oriented. 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 All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn among the investment areas. The stock and bond markets have no equivalent into the real estate’s 1031 exchange. The 1031 industry exemption adds stability for the real estate market allowing accumulated equity to be utilized for further investment.
(Notes)
GDP and Taxes. Taxes can simply be levied for a percentage of GDP. Quicker GDP grows the more government’s ability to tax. Given the stagnate economy and the exporting of jobs along with the massive increase in difficulty there is very little way the states will survive economically without a massive craze of tax proceeds. The only way you can to increase taxes would be to encourage huge increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s income tax rates approached 90% for the top income 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 dual impact of accelerating GDP while providing jobs for the growing middle class. As jobs were came up with tax revenue from the very center class far offset the deductions by high income earners.
Today much of the freed income around the upper income earner has left the country for investments in China and the EU at the expense among the US economic state. Consumption tax polices beginning planet 1980s produced a massive increase in the demand for brand name items. Unfortunately those high luxury goods were more often than not manufactured off shore. Today capital is fleeing to China and Online GST Return India blighting the manufacturing sector from 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 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 number of forms can be reduced together with a couple of pages.