Primary Principle – Taxes should be used primarily to fund government operations and not for economic incentives. Too often breaks 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 in the expense for this many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce a child deduction the max of three of their own kids. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the country 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 the government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the price producing wares. The cost of training is mainly 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 earnings tax code was investment oriented. Today it is consumption oriented. 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 All investment in stocks and bonds should be deductable merely taxed when money is withdrawn over investment areas. The stock and bond markets have no equivalent on the real estate’s 1031 give eachother. The 1031 industry exemption adds stability on the real estate market allowing accumulated equity to be taken for further investment.
GDP and Taxes. Taxes can fundamentally be levied for a percentage of GDP. Quicker GDP grows the greater the government’s capability to tax. Due to the stagnate economy and the exporting of jobs coupled with the massive increase in the red there is very little way the usa will survive economically any massive trend of tax proceeds. The only possible way to increase taxes would be to encourage huge increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% to find income earners. The tax code literally forced financial security 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 came up with tax revenue from the center class far offset the deductions by high income earners.
Today via a tunnel the freed income from the upper income earner has left the country for investments in China and the EU at the expense of this US economy. Consumption tax polices beginning regarding 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were excessively 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 when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for comprising investment profits which are taxed from a capital gains rate which reduces annually based on the length of energy capital is invested the number of forms can be reduced to a couple of pages.