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 pertaining to instance those for race horses benefit the few in the expense among the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce a kid deduction the max of three children. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for expenses and interest on so to speak .. It is advantageous for brand new to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing solutions. The cost of labor is in part 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 towards 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 young 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 All investment in stocks and bonds always be deductable and only taxed when money is withdrawn among the investment niches. The stock and bond markets have no equivalent on the real estate’s 1031 trading. The 1031 marketplace exemption adds stability on the real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can only be levied as being a percentage of GDP. The faster GDP grows the more government’s capability to tax. Within the stagnate economy and the exporting of jobs along with the massive increase owing money there is no way the states will survive economically your massive take up tax revenues. The only way you can to increase taxes is encourage a massive increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s taxes rates approached 90% to your advantage efile Income Tax Return India earners. The tax code literally forced high income 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 come up with tax revenue from the center class far offset the deductions by high income earners.
Today lots of the freed income out of your upper income earner leaves the country for investments in China and the EU in the expense with the US current economic crisis. Consumption tax polices beginning globe 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 in the US and reducing the tax base at a period of time when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for making up investment profits which are taxed at a capital gains rate which reduces annually based upon the length of your capital is invested the amount of forms can be reduced using a couple of pages.