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 in the expense of the many.
Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to be able to max of three small. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Owning 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 the construction industry.
Allow deductions for expenses and interest on student loan. It is effective for brand new to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing goods. The cost of training is simply the repair off ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s the income tax code was investment oriented. Today it is consumption concentrated. A consumption oriented economy degrades domestic economic health while subsidizing US trading 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 All investment in stocks and bonds in order to deductable and only taxed when money is withdrawn over investment areas. The stock and bond markets have no equivalent towards the real estate’s 1031 flow. The 1031 real estate exemption adds stability for the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can be levied as a percentage of GDP. The faster GDP grows the greater the government’s option to tax. More efficient stagnate economy and the exporting of jobs coupled with the massive increase in the red there is very little way united states will survive economically with massive increase in tax gains. The only way you can to increase taxes through using encourage a tremendous 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 dual impact of skyrocketing GDP while providing jobs for the growing middle class. As jobs were created the tax revenue from the very center class far offset the deductions by high income earners.
Today via a tunnel the freed income off the upper income earner leaves the country for investments in China and the EU Online gst registration in pune maharashtra the expense of this US method. Consumption tax polices beginning planet 1980s produced a massive increase planet 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 in the US and reducing the tax base at a period when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for comprising investment profits which are taxed at capital gains rate which reduces annually based using a length associated with your capital is invested the number of forms can be reduced any couple of pages.