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 pertaining to instance those for race horses benefit the few in the expense on the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce the child deduction in order to some max of three children. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for expenses and interest on so to speak .. It pays to for brand new to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the associated with producing wares. The cost on the job 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 on the 1980s earnings tax code was investment oriented. Today it is consumption oriented. 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 All investment in stocks and bonds in order to be deductable only taxed when money is withdrawn using the investment advertises. The stock and bond markets have no equivalent on the real estate’s 1031 flow. The 1031 industry 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 a percentage of GDP. The faster GDP grows the more government’s ability to tax. Because of stagnate economy and the exporting of jobs along with the massive increase with debt there is very little way the us will survive economically any massive take up tax revenues. The only way possible to increase taxes end up being encourage a tremendous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s taxes rates approached 90% for the top 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 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 with the US economy. Consumption tax polices beginning inside the 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 ITR Return File India blighting the manufacturing sector among the US and reducing the tax base at a period when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for accounting for investment profits which are taxed in a very capital gains rate which reduces annually based upon the length of energy capital is invested the amount of forms can be reduced together with a couple of pages.