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 credit. Tax credits with regard to example those for race horses benefit the few in the expense for this many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to a max of three children. The country is full, encouraging large families is overlook.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for education costs and interest on student education loans. It pays to for brand new to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing solutions. The cost of employment is mainly the repair of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior for the 1980s the income tax code was investment oriented. Today it is consumption concentrated. 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 All investment in stocks and bonds always be deductable and only taxed when money is withdrawn from the investment markets. The stock and bond markets have no equivalent on the real estate’s 1031 flow. The 1031 marketplace exemption adds stability into the real estate market allowing accumulated equity to be utilized for further investment.
GDP and Taxes. Taxes can simply be levied as being a percentage of GDP. Quicker GDP grows the greater the government’s chance to tax. More efficient stagnate economy and the exporting of jobs coupled with the massive increase in the red there is very little way the states will survive economically with no massive take up tax proceeds. The only possible way to increase taxes through using encourage huge increase in GDP.
Encouraging Domestic Investment. During the 1950-60s income tax rates approached 90% for top 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 dual impact of growing 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 off the upper income earner has left the country for investments in China and the EU in the expense with the US method. Consumption tax polices beginning globe 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were constantly manufactured off shore. Today capital is fleeing to China and Online GST Return Filing India blighting the manufacturing sector among the US and reducing the tax base at a period 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 in a very capital gains rate which reduces annually based on the length of time capital is invested variety of forms can be reduced using a couple of pages.