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 for this many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a kid deduction to a max of three small. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. In case 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 educational costs and interest on figuratively speaking. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the associated with producing wares. The cost of employment is partly the upkeep of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s the income tax code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading friends. The stagnating economy and the ballooning trade deficit are symptoms e file of Income Tax India consumption tax policies.
Eliminate 401K and IRA programs. All investment in stocks and bonds in order to be deductable just taxed when money is withdrawn using the investment areas. The stock and bond markets have no equivalent on the real estate’s 1031 pass on. The 1031 property exemption adds stability to the real estate market allowing accumulated equity to be taken for further investment.
GDP and Taxes. Taxes can fundamentally be levied as a percentage of GDP. The faster GDP grows the more government’s ability to tax. Because of stagnate economy and the exporting of jobs along with the massive increase owing money there is no way united states will survive economically any massive take up tax profits. The only way you can to increase taxes through using encourage a massive increase in GDP.
Encouraging Domestic Investment. During the 1950-60s tax rates approached 90% to find 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 twin impact of growing GDP while providing jobs for the growing middle class. As jobs were developed the tax revenue from the center class far offset the deductions by high income earners.
Today much of the freed income off the upper income earner has left the country for investments in China and the EU at the expense of the US method. Consumption tax polices beginning planet 1980s produced a massive increase inside of 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 India blighting the manufacturing sector of the US and reducing the tax base at a period when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income duty. Except for making up investment profits which are taxed at a capital gains rate which reduces annually based on the length of your capital is invested the number of forms can be reduced together with a couple of pages.