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 loans. Tax credits while those for race horses benefit the few in the expense of the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction the max of three children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. When 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 expenses and interest on student loans. It pays to for federal government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the associated with producing goods. The cost of employment is simply the upkeep of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior for the 1980s salary tax code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading young partners. The stagnating economy and the ballooning trade deficit are symptoms e file of Income Tax Return in India consumption tax policies.
Eliminate 401K and IRA programs. All investment in stocks and bonds in order to deductable just taxed when money is withdrawn using the investment areas. The stock and bond markets have no equivalent for the real estate’s 1031 exchange. The 1031 industry exemption adds stability to your real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can essentially levied for a percentage of GDP. The faster GDP grows the more government’s ability to tax. Within the stagnate economy and the exporting of jobs along with the massive increase in the red there isn’t really way us states will survive economically with massive craze of tax profits. The only way possible to increase taxes would be to encourage a massive increase in GDP.
Encouraging Domestic Investment. During the 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 skyrocketing GDP while providing jobs for the growing middle-class. As jobs were come up with the tax revenue from the middle class far offset the deductions by high income earners.
Today via a tunnel the freed income around the upper income earner has left the country for investments in China and the EU in the expense among the US financial system. 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 an occasion when debt and an ageing 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 on the length of energy capital is invested quantity of forms can be reduced along with couple of pages.