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 at the expense for this many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another’s favorite charity?
Reduce the child deduction the max of three of their own kids. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President’s council suggests, the will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for education costs and interest on student loan. It is advantageous for federal government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the associated with producing materials. The cost of labor is partly the maintenance of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior for 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 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 All investment in stocks and bonds in order to be deductable only taxed when money is withdrawn using the investment niches. The stock and bond markets have no equivalent to the real estate’s 1031 give eachother. The 1031 marketplace exemption adds stability on the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can fundamentally be levied for a percentage of GDP. Quicker GDP grows the more government’s option to tax. Given the stagnate economy and the exporting of jobs along with the massive increase with debt there is limited way the states will survive economically without a massive increase in tax proceeds. The only possible way to increase taxes is to encourage huge increase in GDP.
Encouraging Domestic Investment. Your 1950-60s tax rates approached 90% for the top income 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 dual impact of growing GDP while providing jobs for the growing middle-class. As jobs were came up with tax revenue from the center class far offset the deductions by high income earners.
Today much of the freed income from the upper income earner has left 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 regarding demand for brand name items. Unfortunately those high luxury goods were frequently manufactured off shore. Today capital is fleeing to China and Online ITR Return Filing India blighting the manufacturing sector among the US and reducing the tax base at a period of time when debt and a maturing 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 with a length of time capital is invested the amount of forms can be reduced using a couple of pages.