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 with regard to example those for race horses benefit the few in the expense among the many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction the max of three of their own kids. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of durable industry.
Allow deductions for education costs and interest on student education loans. It is effective for federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing solutions. The cost of labor is simply the upkeep of ones nicely.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into 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 spouse. 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 All investment in stocks and bonds always be deductable only taxed when money is withdrawn using the investment markets. The stock and bond markets have no equivalent for the real estate’s 1031 give eachother. The 1031 industry exemption adds stability on the real estate market allowing accumulated equity to use for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied for a percentage of GDP. Quicker GDP grows the greater the government’s ability to tax. Within the stagnate economy and the exporting of jobs along with the massive increase in difficulty there is no way the states will survive economically with massive take up tax gains. The only way possible to increase taxes end up being encourage huge increase in GDP.
Encouraging Domestic Investment. Within 1950-60s income tax rates approached 90% to find income earners. The tax code literally forced comfortable living earners to “Invest in America”. Such policies e file of Income Tax Return India deductions for pre paid interest, funding limited partnerships and other investments against earned income had the dual impact of skyrocketing GDP while providing jobs for the growing middle-class. As jobs were come up with the tax revenue from the very center class far offset the deductions by high income earners.
Today almost all of the freed income from the upper income earner has left the country for investments in China and the EU at the expense of the US economic state. Consumption tax polices beginning planet 1980s produced a massive increase in the 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 a time when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income duty. Except for accounting for investment profits which are taxed in a very capital gains rate which reduces annually based with a length of capital is invested amount of forms can be reduced any couple of pages.