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 pertaining to instance those for race horses benefit the few at the expense of the many.

Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?

Reduce a kid deduction the max of three the children. The country is full, encouraging large families is carry.

Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. In the event the mortgage deduction is eliminated, as the President’s council suggests, the uk will see another round of foreclosures and interrupt the recovery of durable industry.

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

Allow 100% deduction of medical costs and insurance policy. In business one deducts the price producing wares. The cost at work is in part the repair of ones health.

Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior for the 1980s salary tax code was investment oriented. Today it is consumption oriented. 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 All investment in stocks and bonds always be deductable merely taxed when money is withdrawn among the investment niches. The stock and bond markets have no equivalent for the real estate’s 1031 flow. The 1031 real estate exemption adds stability to your real estate market allowing accumulated equity to be taken for further investment.

(Notes)

GDP and Taxes. Taxes can simply be levied being a percentage of GDP. The faster GDP grows the more government’s capacity to tax. Given the stagnate economy and the exporting of jobs along with the massive increase in difficulty there isn’t really way the us will survive economically with no massive trend of tax profits. The only way you can to increase taxes is encourage huge increase in GDP.

Encouraging Domestic Investment. Through the 1950-60s income tax rates approached 90% for the top income earners. The tax code literally forced financial security 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 skyrocketing 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 much of the freed income off the upper income earner has left the country for investments in China and the EU in the expense of this US economy. Consumption tax polices beginning planet 1980s produced a massive increase regarding demand for brand name items. Unfortunately those high luxury goods were constantly manufactured off shore. Today capital is fleeing to China and online itr filing india blighting the manufacturing sector among the US and reducing the tax base at a period of time when debt and an ageing population requires greater tax revenues.

The changes above significantly simplify personal income duty. Except for making up investment profits which are taxed at capital gains rate which reduces annually based using a length associated with your capital is invested quantity of forms can be reduced to a couple of pages.