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 because those for race horses benefit the few in the expense among the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a kid deduction together with a max of three the children. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for education costs and interest on figuratively speaking. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the cost of producing everything. The cost of labor is simply the repair off 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 concentrated. 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 All investment in stocks and bonds should be deductable and only taxed when money is withdrawn from the investment niches. The stock and bond markets have no equivalent on the real estate’s 1031 give eachother. The 1031 industry exemption adds stability into the real estate market allowing accumulated equity to be used for further investment.
GDP and Taxes. Taxes can simply be levied being a percentage of GDP. Quicker GDP grows the greater the government’s chance to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase in debt there is very little way united states will survive economically any massive development of tax earnings. The only way you can to increase taxes is to encourage an enormous increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s tax rates approached 90% to find 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 skyrocketing GDP while providing jobs for the growing middle class. As jobs were came up with tax revenue from the middle class far offset the deductions by high income earners.
Today almost all of the freed income contrary to the upper income earner has left the country for investments in China and the EU at the expense with the US economic state. Consumption tax polices beginning regarding 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were too often manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector GST Application Mumbai Maharashtra belonging to the US and reducing the tax base at a period 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 on the capital gains rate which reduces annually based upon the length of time capital is invested the number of forms can be reduced using a couple of pages.