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 credit. Tax credits because those for race horses benefit the few at the expense belonging to the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction to a max of three of their own kids. The country is full, encouraging large families is successfully pass.
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 will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for educational costs and interest on figuratively speaking. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing materials. The cost at work is mainly the repair of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s salary 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 All investment in stocks and bonds ought to deductable and only taxed when money is withdrawn among the investment market. The stock and bond markets have no equivalent for the real estate’s 1031 pass on. The 1031 industry exemption adds stability into the real estate market allowing accumulated equity to be utilized for further investment.
(Notes)
GDP and Taxes. Taxes can be levied being a percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase in debt there is very little way the us will survive economically your massive take up tax revenues. The only way possible to increase taxes is to encourage an enormous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s income tax rates approached 90% for 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 growing 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 via a tunnel the freed income from the upper income tax rates india earner has left the country for investments in China and the EU in the expense of the US economy. Consumption tax polices beginning planet 1980s produced a massive increase inside of 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 in the US and reducing the tax base at a time when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for accounting for investment profits which are taxed from a capital gains rate which reduces annually based around the length of your capital is invested amount of forms can be reduced any couple of pages.