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 credit. Tax credits because those for race horses benefit the few at the expense belonging to the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to be able to max of three of their own kids. The country is full, encouraging large families is carry.
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, a rural area 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 the government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing wares. The cost on the job is simply the repair of 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 oriented. 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 All investment in stocks and bonds should be deductable and only taxed when money is withdrawn out from the investment market. The stock and bond markets have no equivalent for the real estate’s 1031 trading. The 1031 property exemption adds stability to your real estate market allowing accumulated equity to be taken for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied as a percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Given the stagnate economy and the exporting of jobs along with the massive increase in the red there does not way the usa will survive economically without a massive increase in tax proceeds. The only way you can to increase taxes is to encourage a massive increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s tax rates approached 90% to your advantage income earners. The tax code literally forced high income 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 developed the tax revenue from the center class far offset the deductions by high income earners.
Today plenty of the freed income out of your upper income earner leaves the country for investments in China and the EU in the expense of this US economic state. Consumption tax polices beginning planet 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and Online ITR Return File India blighting the manufacturing sector of the US and reducing the tax base at a period of time when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for making up investment profits which are taxed at a capital gains rate which reduces annually based with a length of time capital is invested quantity of forms can be reduced to a couple of pages.