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 attributes. Tax credits such as those for race horses benefit the few in the expense for this many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce a child deduction to a max of three children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for expenses and interest on student loan. It is effective for federal government to encourage education.
Allow 100% deduction of medical costs and insurance coverage. In business one deducts the associated with producing solutions. The cost at work is mainly the maintenance 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 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 All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn using the investment market. The stock and bond markets have no equivalent into the real estate’s 1031 exchange. The 1031 real estate exemption adds stability into the real estate market allowing accumulated equity to be utilized for further investment.
(Notes)
GDP and Taxes. Taxes can simply be levied for a percentage of GDP. The faster GDP grows the more government’s capacity to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase in difficulty there is no way the states will survive economically your massive trend of tax profits. The only possible way to increase taxes through using encourage a tremendous increase in GDP.
Encouraging Domestic Investment. Within 1950-60s tax rates approached 90% for top level Online Income Tax Filing India earners. The tax code literally forced high income 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 growing GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the center class far offset the deductions by high income earners.
Today plenty of the freed income around the upper income earner has left the country for investments in China and the EU in the expense for the US financial system. Consumption tax polices beginning inside the 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 blighting the manufacturing sector belonging to the US and reducing the tax base at a time full when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for accounting for investment profits which are taxed in a very capital gains rate which reduces annually based upon the length of energy capital is invested the number of forms can be reduced together with a couple of pages.