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 while those for race horses benefit the few in the expense belonging to the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction in order to some max of three the children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for expenses and interest on student education loans. It pays to for federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing solutions. The cost of labor is partially the repair off ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on 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 partners. 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 All investment in stocks and bonds in order to be deductable in support taxed when money is withdrawn out from the investment advertises. The stock and bond markets have no equivalent on the real estate’s 1031 pass on. The 1031 real estate exemption adds stability to your real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can only be levied as a percentage of GDP. The faster GDP grows the more government’s option to tax. More efficient stagnate economy and the exporting of jobs along with the massive increase with debt there is very little way united states will survive economically your massive increase in tax gains. The only way you can to increase taxes end up being encourage huge increase in GDP.
Encouraging Domestic Investment. Within 1950-60s taxes rates approached 90% for top level income earners. The tax code literally forced great living 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 developed the tax revenue from the center class far offset the deductions by high income earners.
Today lots of the freed income from the upper income earner has left the country for investments in China and the EU in the expense of this US current economic crisis. Consumption tax polices beginning regarding 1980s produced a massive increase in the demand for brand name items. Unfortunately those high luxury Online Goods and Service Tax registration pune were frequently manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector in the US and reducing the tax base at a time full when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for comprising investment profits which are taxed on the capital gains rate which reduces annually based on the length of energy capital is invested the amount of forms can be reduced together with a couple of pages.