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 snack bars. Tax credits while those for race horses benefit the few at the expense of the many.

Eliminate deductions of charitable contributions. Must you want one tax payer subsidize another’s favorite charity?

Reduce the youngster deduction in order to some max of three of their own kids. The country is full, encouraging large families is pass.

Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. If your mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of market industry.

Allow deductions for expenses and interest on student education loans. It is effective for the government to encourage education.

Allow 100% deduction of medical costs and insurance coverage. In business one deducts the price producing goods. The cost at work is simply the maintenance of ones fitness.

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 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 All investment in stocks and bonds in order to deductable and only taxed when money is withdrawn over investment niches. The stock and bond markets have no equivalent to the real estate’s 1031 pass on. The 1031 industry exemption adds stability to your real estate market allowing accumulated equity to be taken for further investment.

(Notes)

GDP and Taxes. Taxes can be levied as the percentage of GDP. The faster GDP grows the greater the government’s option to tax. Due to the stagnate economy and the exporting of jobs coupled with the massive increase in difficulty there is very little way united states will survive economically any massive trend of tax proceeds. The only way possible to increase taxes end up being encourage huge increase in GDP.

Encouraging Domestic Investment. During the 1950-60s tax rates approached 90% to your advantage 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 accelerating GDP while providing jobs for the growing middle class. As jobs were come up with the tax revenue from the guts class far offset the deductions by high income earners.

Today via a tunnel the freed income around the upper income earner leaves the country for investments in China and the EU at the expense of this US economic state. Consumption tax polices beginning regarding 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were frequently manufactured off shore. Today capital is fleeing to China and GST Return Filing Online India blighting the manufacturing sector belonging to 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 tax bill. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based on the length of your capital is invested amount of forms can be reduced any couple of pages.