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 credit. Tax credits such as those for race horses benefit the few at the expense for this many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the child deduction the max of three small. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for educational costs and interest on student loans. It is advantageous for the government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing everything. The cost of training is mainly the upkeep of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to the 1980s the income tax code was investment oriented. Today it is consumption oriented. 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investment Online GST Registration in Mumbai Maharashtra stocks and bonds always be deductable just taxed when money is withdrawn among the investment advertises. The stock and bond markets have no equivalent towards the real estate’s 1031 exchange. The 1031 property exemption adds stability for the real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can only be levied as a percentage of GDP. The faster GDP grows the greater the government’s option to tax. Given the stagnate economy and the exporting of jobs along with the massive increase with debt there is no way united states will survive economically with no massive take up tax gains. The only way you can to increase taxes is to encourage huge increase in GDP.
Encouraging Domestic Investment. Within 1950-60s income tax rates approached 90% for the top income earners. The tax code literally forced comfortable 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 accelerating GDP while providing jobs for the growing middle class. As jobs were created the tax revenue from the center class far offset the deductions by high income earners.
Today lots 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 financial system. Consumption tax polices beginning in the 1980s produced a massive increase regarding 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 time full when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for comprising investment profits which are taxed from a capital gains rate which reduces annually based with a length of your capital is invested variety of forms can be reduced to a couple of pages.