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 loans. Tax credits with regard to example those for race horses benefit the few at the expense belonging to the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction the max of three younger children. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. In case the mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of the construction 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 plan. In business one deducts the cost of producing goods. The cost at work is mainly the upkeep of ones nicely.
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 oriented. 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 All investment in stocks and bonds always be deductable and only taxed when money is withdrawn using the investment markets. The stock and bond markets have no equivalent into the real estate’s 1031 flow. The 1031 industry exemption adds stability to your real estate market allowing accumulated equity to be taken for further investment.
(Notes)
GDP and Taxes. Taxes can be levied for a percentage of GDP. Quicker GDP grows the more government’s option to tax. Given the stagnate economy and the exporting of jobs along with the massive increase owing money there isn’t really way united states will survive economically without a massive increase in tax proceeds. The only way possible to increase taxes is to encourage huge increase in GDP.
Encouraging Domestic Investment. Your 1950-60s taxes rates approached 90% for the top Income Tax Rates India 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 middle class far offset the deductions by high income earners.
Today much of the freed income from the upper income earner leaves the country for investments in China and the EU in the expense of the 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 frequently manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector among the US and reducing the tax base at a time 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 from a capital gains rate which reduces annually based upon the length of your capital is invested quantity of forms can be reduced using a couple of pages.