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 snack bars. Tax credits because those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction in order to some max of three younger children. The country is full, encouraging large families is successfully 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 market industry.
Allow deductions for expenses and interest on student loan. It is advantageous for the government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the cost of producing materials. The cost of labor is partly the upkeep of ones very well being.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to the 1980s revenue tax code was investment oriented. Today it is consumption focused. 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 All investment in stocks and bonds in order to deductable just taxed when money is withdrawn over investment advertises. The stock and bond markets have no equivalent to the real estate’s 1031 exchange. The 1031 real estate exemption adds stability for the real estate market allowing accumulated equity to be utilized for further investment.
(Notes)
GDP and Taxes. Taxes can fundamentally be levied being a percentage of GDP. Quicker GDP grows the greater the government’s capability to tax. Given the stagnate economy and the exporting of jobs along with the massive increase with debt there does not way united states will survive economically without a massive take up tax revenues. The only possible way to increase taxes would be to encourage an enormous increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s tax rates approached 90% for the top income 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 almost all of the freed income around the upper income earner leaves the country for investments in China and the EU at the expense of this US current economic crisis. Consumption tax polices beginning planet 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and GST Return Filing Online India blighting the manufacturing sector belonging to 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 comprising investment profits which are taxed from a capital gains rate which reduces annually based with a length of capital is invested the amount of forms can be reduced any couple of pages.