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 credits. Tax credits because those for race horses benefit the few in the expense belonging to the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a child deduction the max of three the children. The country is full, encouraging large families is overlook.
Keep the deduction of home mortgage interest. Home ownership 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 durable industry.
Allow deductions for education costs and interest on student education loans. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the associated with producing everything. The cost of employment is in part the upkeep of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 1980s revenue 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 All investment in stocks and bonds in order to be deductable just taxed when money is withdrawn over investment advertises. The stock and bond markets have no equivalent for the real estate’s 1031 exchange. The 1031 industry exemption adds stability to the real estate market allowing accumulated equity to be utilized for further investment.
GDP and Taxes. Taxes can fundamentally be levied as the percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Given the stagnate economy and the exporting of jobs along with the massive increase in debt there does not way the usa will survive economically with no massive trend of tax gains. The only way possible to increase taxes is to encourage huge increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s income tax rates approached 90% for top level 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 growing GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the guts class far offset the deductions by high efile Income Tax India earners.
Today via a tunnel 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 method. Consumption tax polices beginning in the 1980s produced a massive increase in 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 of the US and reducing the tax base at a period when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income duty. Except for comprising investment profits which are taxed on the capital gains rate which reduces annually based with a length of time capital is invested amount of forms can be reduced to a couple of pages.