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 attributes. Tax credits because those for race horses benefit the few in 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 in order to some max of three small. The country is full, encouraging large families is pass.

Keep the deduction of home mortgage interest. Buying a home strengthens and adds resilience to the economy. If 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 educational costs and interest on figuratively speaking. It pays to for brand new to encourage education.

Allow 100% deduction of medical costs and insurance plan. In business one deducts the cost of producing goods. The cost of training is mainly the maintenance of ones very well being.

Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s the income 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 All investment in stocks and bonds always be deductable merely taxed when money is withdrawn using the investment markets. The stock and bond markets have no equivalent into the real estate’s 1031 trading. The 1031 industry exemption adds stability to the real estate market allowing accumulated equity to be used for further investment.

(Notes)

GDP and Taxes. Taxes can fundamentally be levied for a percentage of GDP. Quicker GDP grows the more government’s capacity to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase in debt there isn’t really way united states will survive economically your massive development of tax profits. The only possible way to increase taxes is to encourage a massive increase in GDP.

Encouraging Domestic Investment. Through the 1950-60s tax rates approached 90% for top level Online Income Tax Filing In India earners. The tax code literally forced huge salary 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 accelerating GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the middle class far offset the deductions by high income earners.

Today via a tunnel the freed income out of your upper income earner has left the country for investments in China and the EU in the expense among the 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 India blighting the manufacturing sector among the US and reducing the tax base at a time when debt and an ageing population requires greater tax revenues.

The changes above significantly simplify personal income tax bill. Except for comprising investment profits which are taxed from a capital gains rate which reduces annually based on the length associated with your capital is invested variety of forms can be reduced any couple of pages.