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 with regard to example those for race horses benefit the few in the expense for this many.
Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?
Reduce your son or daughter deduction in order to some max of three of their own kids. The country is full, encouraging large families is carry.
Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. If the mortgage deduction is eliminated, as the President’s council suggests, a rural area will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for educational costs and interest on so to speak .. It pays to for federal government to encourage education.
Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing materials. The cost of employment is partially the upkeep of ones fitness.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to the 1980s earnings tax code was investment oriented. Today it is consumption focused. 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 All investment in stocks and bonds ought to deductable only taxed when money is withdrawn over investment niches. The stock and bond markets have no equivalent towards the real estate’s 1031 trading. The 1031 real estate exemption adds stability to the real estate market allowing accumulated equity to be used for further investment.
GDP and Taxes. Taxes can be levied as being a percentage of GDP. The faster GDP grows the greater the government’s capacity to tax. Given the stagnate economy and the exporting of jobs along with the massive increase in debt there isn’t really way the states will survive economically without a massive increase in tax revenues. The only possible way to increase taxes is to encourage a massive increase in GDP.
Encouraging Domestic Investment. Within 1950-60s tax rates approached 90% for top income earners. The tax code literally forced huge salary 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 dual impact of accelerating GDP while providing jobs for the growing middle class. As jobs were came up with tax revenue from the middle class far offset the deductions by high income earners.
Today much of the freed income out of your upper income earner has left the country for investments in China and the EU in the expense with the US economy. 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 in the US and reducing the tax base at a time full when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income place a burden on. Except for accounting for 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.