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 attributes. Tax credits while those for race horses benefit the few at the expense on the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the child deduction to be able to max of three the 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, a rural area will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for expenses and interest on student education loans. It is effective for federal government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the price producing materials. The cost at work is partly the upkeep of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s earnings 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 of consumption tax policies.
Eliminate 401K and IRA programs. All investment in stocks and bonds in order to be deductable only taxed when money is withdrawn from the investment markets. The stock and bond markets have no equivalent on the real estate’s 1031 trading. The 1031 real estate exemption adds stability for the real estate market allowing accumulated equity to use for further investment.
GDP and Taxes. Taxes can only be levied for a percentage of GDP. Quicker GDP grows the greater the government’s chance to tax. Within the stagnate economy and the exporting of jobs along with the massive increase in difficulty there is very little way united states will survive economically any massive trend of tax proceeds. The only way you can to increase taxes end up being encourage a massive increase in GDP.
Encouraging Domestic Investment. During the 1950-60s taxes rates approached 90% for top income earners. The tax code literally forced great 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 twin impact of accelerating GDP while providing jobs for the growing middle class. As jobs were created the tax revenue from the middle 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 at the expense with the US method. Consumption tax polices beginning regarding 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were more often than not manufactured off shore. Today capital is fleeing to China and India tax Return Online blighting the manufacturing sector of 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 accounting for investment profits which are taxed at a capital gains rate which reduces annually based upon the length of energy capital is invested variety of forms can be reduced to a couple of pages.