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 credits. Tax credits with regard to example those for race horses benefit the few at the expense among the many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction in order to some max of three children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for educational costs and interest on student loan. It pays to for brand new to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the associated with producing goods. The cost of employment is partly the maintenance of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 1980s the income tax code was investment oriented. Today it is consumption driven. 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 All investment in stocks and bonds ought to deductable just taxed when money is withdrawn using the investment markets. The stock and bond markets have no equivalent on the real estate’s 1031 pass on. The 1031 marketplace exemption adds stability to the real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can simply be levied as the percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase in debt there is limited way united states will survive economically your massive craze of tax revenues. The only way you can to increase taxes is encourage huge increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s taxes rates approached 90% to find 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 skyrocketing GDP while providing jobs for the growing middle class. As jobs were come up with tax revenue from the middle class far offset the deductions by high income earners.
Today almost all of the freed income off the upper income earner has left the country for investments in China and the EU in the expense of the US method. Consumption tax polices beginning regarding 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were too often manufactured off shore. Today capital is fleeing to China and Online ITR Return Filing India blighting the manufacturing sector belonging to the US and reducing the tax base at an occasion when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based around the length of energy capital is invested the amount of forms can be reduced to a couple of pages.