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 credit. Tax credits because those for race horses benefit the few in the expense for this many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?
Reduce a child deduction in order to some max of three younger children. The country is full, encouraging large families is successfully pass.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, GST Registration online Mumbai Maharashtra as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for educational costs and interest on student education loans. It pays to for brand new to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the price producing solutions. The cost of labor is partially the upkeep of ones very well being.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 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 All investment in stocks and bonds should be deductable just taxed when money is withdrawn using the investment advertises. The stock and bond markets have no equivalent to the real estate’s 1031 flow. The 1031 marketplace exemption adds stability on the real estate market allowing accumulated equity to be used for further investment.
(Notes)
GDP and Taxes. Taxes can fundamentally be levied for a percentage of GDP. The faster GDP grows the more government’s ability to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase owing money there is no way us states will survive economically with no massive increase in tax proceeds. The only way possible to increase taxes is to encourage an enormous increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% for top level income earners. The tax code literally forced huge salary 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 skyrocketing GDP while providing jobs for the growing middle class. As jobs were come up with tax revenue from the very center class far offset the deductions by high income earners.
Today plenty of the freed income from 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 globe 1980s produced a massive increase in the demand for brand name items. Unfortunately those high luxury goods were too often manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector of the US and reducing the tax base at a period of 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 in a very capital gains rate which reduces annually based on the length of capital is invested variety of forms can be reduced using a couple of pages.