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 with regard to example those for race horses benefit the few at the expense for this many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce the child deduction together with a max of three younger children. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. In case 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 layout industry.
Allow deductions for expenses and interest on student loans. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the price producing goods. The cost on the job is in part the upkeep of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 1980s salary tax code was investment oriented. Today it is consumption focused. 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 All investment in stocks and bonds in order to be deductable and only taxed when money is withdrawn over investment areas. The stock and bond markets have no equivalent to the real estate’s 1031 trading. The 1031 industry exemption adds stability into the real estate market allowing accumulated equity to be used for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied as being a percentage of GDP. Quicker GDP grows the more government’s chance to tax. Given the stagnate economy and the exporting of jobs along with the massive increase with debt there is no way the us will survive economically without a massive trend of tax proceeds. The only way possible to increase taxes would be to encourage huge increase in GDP.
Encouraging Domestic Investment. Within 1950-60s Online Income Tax Return India tax rates approached 90% for the top income earners. The tax code literally forced comfortable 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 dual impact of growing GDP while providing jobs for the growing middle class. As jobs were come up with tax revenue from the guts class far offset the deductions by high income earners.
Today plenty of the freed income around the upper income earner has left the country for investments in China and the EU at the expense among the US financial system. Consumption tax polices beginning inside the 1980s produced a massive increase in the demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector among the US and reducing the tax base at an occasion when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for accounting for investment profits which are taxed in a very capital gains rate which reduces annually based on the length of energy capital is invested the number of forms can be reduced together with a couple of pages.