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 credits. 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 child deduction to a max of three the children. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, Online GST Return Filing a rural area will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for expenses and interest on student loans. It is advantageous for brand new to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the cost of producing goods. The cost of employment is simply the upkeep of ones very well being.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to 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 spouse. 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 All investment in stocks and bonds in order to be deductable only taxed when money is withdrawn from the investment advertises. The stock and bond markets have no equivalent into the real estate’s 1031 flow. The 1031 industry exemption adds stability into the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can fundamentally be levied being a percentage of GDP. The faster GDP grows the greater the government’s capacity to tax. Because of stagnate economy and the exporting of jobs along with the massive increase in the red there is very little way us states will survive economically without a massive increase in tax profits. The only possible way to increase taxes is encourage a massive increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% for the 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 created the tax revenue from the middle class far offset the deductions by high income earners.
Today via a tunnel the freed income around the upper income earner leaves the country for investments in China and the EU in the expense with the US economy. Consumption tax polices beginning globe 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were too often manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector among the US and reducing the tax base at an occasion when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for accounting for investment profits which are taxed at capital gains rate which reduces annually based using a length of your capital is invested variety of forms can be reduced along with couple of pages.