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 such as those for race horses benefit the few in the expense belonging to the many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce the child deduction the max of three small. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for expenses and interest on student loans. It pays to for federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing wares. The cost at work is partially the repair of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to 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 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 All investment in stocks and bonds ought to deductable merely taxed when money is withdrawn using the investment markets. The stock and bond markets have no equivalent into the real estate’s 1031 pass on. The 1031 property exemption adds stability to your real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can fundamentally be levied as a percentage of GDP. The faster GDP grows the greater the government’s capability to tax. Within the stagnate economy and the exporting of jobs along with the massive increase in debt there is very little way the usa will survive economically any massive take up tax revenues. The only way you can to increase taxes through using encourage a massive increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s income tax rates approached 90% to find income earners. The tax code literally forced comfortable living earners to “Invest Online GST Registration in Pune Maharashtra America”. Such policies of deductions for pre paid interest, funding limited partnerships and other investments against earned income had the twin impact of accelerating GDP while providing jobs for the growing middle-class. As jobs were come up with tax revenue from the center class far offset the deductions by high income earners.
Today almost all of the freed income contrary to the upper income earner leaves the country for investments in China and the EU at the expense with the US method. Consumption tax polices beginning in the 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were frequently manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector from the US and reducing the tax base at a time full when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for comprising investment profits which are taxed at capital gains rate which reduces annually based upon the length of your capital is invested variety of forms can be reduced any couple of pages.