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 such as those for race horses benefit the few in the expense belonging to 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 the max of three small. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. If the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for educational costs and interest on student loan. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the associated with producing solutions. The cost of labor is mainly the maintenance of ones fitness.
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 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 All investment in stocks and bonds in order to be deductable only taxed when money is withdrawn out from the investment market. The stock and bond markets have no equivalent into the real estate’s 1031 trading. The 1031 real estate exemption adds stability to your real estate market allowing accumulated equity to supply for further investment.
(Notes)
GDP and Taxes. Taxes can fundamentally be levied as the percentage of GDP. The faster GDP grows the greater the government’s option to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase in debt there is no way the us will survive economically with massive craze of tax gains. The only possible way to increase taxes end up being encourage a massive increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% for top level Income Tax Rates India earners. The tax code literally forced huge salary 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 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 via a tunnel the freed income out of your upper income earner has left the country for investments in China and the EU at the expense of this US method. Consumption tax polices beginning planet 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were more often than not manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector of 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 duty. Except for making up investment profits which are taxed at a capital gains rate which reduces annually based around the length of time capital is invested the amount of forms can be reduced using a couple of pages.