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 attributes. Tax credits such as those for race horses benefit the few in the expense of the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce a child deduction to be able to max of three children. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. In case the mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for expenses and interest on student education loans. It is effective for federal government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the associated with producing materials. The cost of labor is mainly the upkeep of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s earnings tax code was investment oriented. Today it is consumption driven. A consumption oriented economy degrades domestic economic health while subsidizing US trading collaborators. 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 All investment in stocks and bonds ought to deductable just taxed when money is withdrawn from the investment advertises. The stock and bond markets have no equivalent into the real estate’s 1031 trading. The 1031 industry exemption adds stability to your real estate market allowing accumulated equity to supply for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied as a percentage of GDP. The faster GDP grows the more government’s ability to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase in debt there does not way us states will survive economically your massive development of tax revenues. The only possible way to increase taxes is encourage huge increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s 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 twin impact of growing 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 much of the freed income contrary to the upper Income Tax Rates India earner has left the country for investments in China and the EU in the expense with the US economic state. 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 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 an occasion when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income place a burden on. Except for making up investment profits which are taxed at capital gains rate which reduces annually based on the length of capital is invested the number of forms can be reduced along with couple of pages.