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 with regard to example those for race horses benefit the few in the expense belonging to 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 the children. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for educational costs and interest on figuratively speaking. It is effective for federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the associated with producing materials. The cost at work is simply the repair off ones health.
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 friends. 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 All investment in stocks and bonds in order to deductable merely taxed when money is withdrawn among the investment markets. The stock and bond markets have no equivalent on the real estate’s 1031 exchange. The 1031 real estate exemption adds stability into the real estate market allowing accumulated equity to be utilized for further investment.
GDP and Taxes. Taxes can be levied as being a percentage of GDP. The faster GDP grows the greater the government’s ability to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase in difficulty there is limited way united states will survive economically with no massive trend of tax proceeds. 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 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 skyrocketing 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 plenty of the freed income from the upper income earner leaves the country for investments in China and the EU at the expense for the US financial system. Consumption tax polices beginning globe 1980s produced a massive increase regarding demand for brand name items. Unfortunately those high luxury goods were frequently manufactured off shore. Today capital is fleeing to China and GST Return Filing Online India blighting the manufacturing sector of 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 bill. Except for making up investment profits which are taxed in a very capital gains rate which reduces annually based on the length of time capital is invested quantity of forms can be reduced to a couple of pages.