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 credits. Tax credits because those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce the child deduction to a max of three of their own kids. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Home ownership 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 the construction industry.
Allow deductions for educational costs and interest on student loan. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing solutions. The cost at work is in part the maintenance of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s earnings 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 efile Tax Return India policies.
Eliminate 401K and IRA programs. All investment in stocks and bonds ought to deductable and only taxed when money is withdrawn among the investment advertises. The stock and bond markets have no equivalent to the real estate’s 1031 trading. The 1031 real estate exemption adds stability to the real estate market allowing accumulated equity to be taken for further investment.
(Notes)
GDP and Taxes. Taxes can simply be levied as a percentage of GDP. The faster GDP grows the more government’s option to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase owing money there is limited way us states will survive economically any massive increase in tax profits. The only possible way to increase taxes would be to encourage an enormous increase in GDP.
Encouraging Domestic Investment. During the 1950-60s taxes rates approached 90% to find income earners. The tax code literally forced great 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 dual impact of accelerating GDP while providing jobs for the growing middle-class. As jobs were come up with tax revenue from the middle class far offset the deductions by high income earners.
Today via a tunnel the freed income off the upper income earner has left the country for investments in China and the EU in the expense for the US economy. Consumption tax polices beginning inside the 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 in 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 tax. Except for making up 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 along with couple of pages.