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 loans. Tax credits such as those for race horses benefit the few in the expense of the many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce a kid deduction together with a max of three small. 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, a rural area will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for education costs and interest on student education loans. It is effective for federal 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 repair of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s salary 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 All investment in stocks and bonds in order to deductable just taxed when money is withdrawn from the investment areas. The stock and bond markets have no equivalent into the real estate’s 1031 trading. The 1031 marketplace exemption adds stability into the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can fundamentally be levied as a percentage of GDP. Quicker GDP grows the more government’s chance to tax. More efficient stagnate economy and the exporting of jobs coupled with the massive increase with debt there isn’t really way the usa will survive economically with massive development of tax revenues. The only way possible to increase taxes would be to encourage a massive increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s income tax rates approached 90% to your advantage income earners. The tax code literally forced huge salary earners to “Invest in America”. Such policies of deductions for pre paid interest, GST Registration online Mumbai Maharashtra funding limited partnerships and other investments against earned income had the dual impact of skyrocketing GDP while providing jobs for the growing middle-class. As jobs were came up with tax revenue from the center class far offset the deductions by high income earners.
Today almost all of the freed income out of your upper income earner leaves the country for investments in China and the EU at the expense of this US financial system. Consumption tax polices beginning inside the 1980s produced a massive increase planet 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 belonging to 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 bill. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based around the length of energy capital is invested amount of forms can be reduced along with couple of pages.