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 because those for race horses benefit the few at the expense among the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction the max of three children. The country is full, encouraging large families is overlook.
Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for education costs and interest on student loan. It is effective for federal 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 health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s the income tax code was investment oriented. Today it is consumption driven. 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 All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn over investment niches. The stock and bond markets have no equivalent on the real estate’s 1031 give eachother. The 1031 property exemption adds stability to the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can fundamentally be levied being a percentage of GDP. Quicker GDP grows the more government’s ability to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase in debt there isn’t really way united states will survive economically with no massive craze of tax profits. The only possible way to increase taxes would be to encourage an enormous increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% to your advantage 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 twin impact of accelerating 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 out of your upper income earner has left the country for investments in China and the EU in the expense of this US financial system. Consumption tax polices beginning in the 1980s produced a massive increase in the demand for brand name items. Unfortunately those high luxury goods were constantly manufactured off shore. Today capital is fleeing to China and Online ITR Return File India blighting the manufacturing sector belonging to the US and reducing the tax base at a period of time when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based around the length of capital is invested amount of forms can be reduced using a couple of pages.