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 with regard to example those for race horses benefit the few at the expense belonging to the many.
Eliminate deductions of charitable contributions. So here is one Online Tax Return Filing India payer subsidize another’s favorite charity?
Reduce the child deduction together with a max of three small. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Owning a home 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 expenses and interest on student loan. It is advantageous for federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the associated with producing everything. The cost at work is mainly the maintenance of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s salary tax code was investment oriented. Today it is consumption concentrated. A consumption oriented economy degrades domestic economic health while subsidizing US trading friends. 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 All investment in stocks and bonds should be deductable merely taxed when money is withdrawn out from the investment niches. The stock and bond markets have no equivalent on the real estate’s 1031 trading. The 1031 marketplace exemption adds stability for the real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can essentially levied for a percentage of GDP. Quicker GDP grows the more government’s option to tax. Given the stagnate economy and the exporting of jobs along with the massive increase owing money there is limited way the states will survive economically any massive trend of tax revenues. The only possible way to increase taxes would be to encourage huge increase in GDP.
Encouraging Domestic Investment. Your 1950-60s tax rates approached 90% to find 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 came up with tax revenue from the guts class far offset the deductions by high income earners.
Today lots of the freed income around the upper income earner leaves the country for investments in China and the EU in the expense among the US economic state. Consumption tax polices beginning regarding 1980s produced a massive increase a 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 full when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based with a length associated with your capital is invested the amount of forms can be reduced using a couple of pages.