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 because 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 child deduction to a max of three of their own kids. The country is full, encouraging large families is overlook.

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, the world will see another round of foreclosures and interrupt the recovery of durable industry.

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

Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing goods. The cost of labor is partly the upkeep of ones nicely.

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 driven. A consumption oriented economy degrades domestic economic health while subsidizing US trading friends. 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 All investment in stocks and bonds in order to be deductable only taxed when money is withdrawn among the investment niches. The stock and bond markets have no equivalent into the real estate’s 1031 pass on. The 1031 property exemption adds stability on the real estate market allowing accumulated equity to be used for further investment.

(Notes)

GDP and Taxes. Taxes can only be levied being a percentage of GDP. Quicker GDP grows the greater the government’s chance to tax. Given the stagnate economy and the exporting of jobs along with the massive increase in the red there is very little way us states will survive economically without a massive trend of tax profits. The only possible way to increase taxes is to encourage an enormous increase in GDP.

Encouraging Domestic Investment. Within 1950-60s income 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 dual impact of growing 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 almost all of the freed income out of your upper income earner leaves the country for investments in China and the EU at the expense of the US economy. Consumption tax polices beginning globe 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were more often than not manufactured off shore. Today capital is fleeing to China and Online ITR Return File India blighting the manufacturing sector belonging to the US and reducing the tax base at a time full when debt and an ageing 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 with a length of time capital is invested the number of forms can be reduced together with a couple of pages.