Primary Principle – Taxes should be used primarily to fund government operations and not for economic incentives. Too often breaks 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 at the expense among the many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce the youngster deduction to a max of three children. The country is full, encouraging large families is successfully pass.
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 durable industry.
Allow deductions for educational costs and interest on student loans. It is advantageous for brand new to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the price producing solutions. The cost on the job is partially the maintenance of ones nicely.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to 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 young 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 All investment in stocks and bonds always be deductable merely taxed when money is withdrawn over investment niches. The stock and bond markets have no equivalent for Online GST Registration Maharashtra the real estate’s 1031 exchange. The 1031 property exemption adds stability to the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can essentially levied as the percentage of GDP. The faster GDP grows the more government’s chance to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase with debt there isn’t really way the states will survive economically with no massive trend of tax proceeds. The only way possible to increase taxes would be to encourage huge increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s taxes 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 twin impact of growing GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the guts class far offset the deductions by high income earners.
Today via a tunnel the freed income contrary to the upper income earner leaves the country for investments in China and the EU at the expense for the US current economic crisis. Consumption tax polices beginning globe 1980s produced a massive increase inside of the 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 among the US and reducing the tax base at a time full when debt and a maturing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for accounting for investment profits which are taxed at a capital gains rate which reduces annually based with a length of your capital is invested quantity of forms can be reduced using a couple of pages.