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 snack bars. Tax credits because those for race horses benefit the few in the expense on the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a child deduction together with a max of three younger 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. In case 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 federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the associated with producing goods. The cost of employment is in part the repair off ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior Online GST Return Filing towards 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 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 All investment in stocks and bonds always be deductable in support taxed when money is withdrawn from the investment areas. The stock and bond markets have no equivalent on the real estate’s 1031 exchange. The 1031 real estate exemption adds stability into the real estate market allowing accumulated equity to be taken for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied as the percentage of GDP. Quicker GDP grows the more government’s chance to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase in difficulty there is very little way united states will survive economically with no massive craze of tax earnings. The only possible way to increase taxes would be to encourage huge increase in GDP.
Encouraging Domestic Investment. During the 1950-60s taxes rates approached 90% for the top income earners. The tax code literally forced huge salary 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 came up with tax revenue from the very center class far offset the deductions by high income earners.
Today lots of the freed income around 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 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 India blighting the manufacturing sector among 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 in taxes. Except for comprising investment profits which are taxed on the capital gains rate which reduces annually based upon the length of capital is invested quantity of forms can be reduced any couple of pages.