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 snack bars. Tax credits pertaining to instance those for race horses benefit the few at the expense among the many.
Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?
Reduce a child deduction to be able to max of three children. The country is full, encouraging large families is get.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the country will see another round of foreclosures and interrupt the recovery of structure 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 policy. In business one deducts the cost of producing solutions. The cost of labor is in part the upkeep of ones health.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s earnings tax code was investment oriented. Today it is consumption driven. 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 All investment in stocks and bonds should be deductable only taxed when money is withdrawn from the investment niches. The stock and bond markets have no equivalent to the real estate’s 1031 exchange. The 1031 real estate exemption adds stability to your real estate market allowing accumulated equity to be used for further investment.
GDP and Taxes. Taxes can simply be levied being a percentage of GDP. The faster GDP grows the greater the government’s capacity to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase in the red there is limited way the states will survive economically with no massive development of tax proceeds. The only possible way to increase taxes is to encourage huge increase in GDP.
Encouraging Domestic Investment. During the 1950-60s tax rates approached 90% for top level income earners. The tax code literally forced great living earners to “Invest Online GST Registration in Pune Maharashtra 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 developed the tax revenue from the very center class far offset the deductions by high income earners.
Today much of the freed income around the upper income earner leaves the country for investments in China and the EU in the expense among the US method. Consumption tax polices beginning regarding 1980s produced a massive increase planet 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 among the US and reducing the tax base at an occasion when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income in taxes. Except for accounting for investment profits which are taxed on the capital gains rate which reduces annually based around the length of capital is invested amount of forms can be reduced along with couple of pages.