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 loans. Tax credits pertaining to instance those for race horses benefit the few in the expense among the many.

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

Reduce the youngster deduction to be able to max of three small. The country is full, encouraging large families is get.

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

Allow deductions for educational costs and interest on student education loans. It pays to for federal government to encourage education.

Allow 100% deduction of medical costs and insurance plan. In business one deducts the price producing solutions. The cost on the job is partly the repair off ones nicely.

Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior towards 1980s salary tax code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading young 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 All investment in stocks and bonds always be deductable and only taxed when money is withdrawn from the investment market. The stock and bond markets have no equivalent towards the real estate’s 1031 flow. The 1031 real estate exemption adds stability for the real estate market allowing accumulated equity to be taken for further investment.

(Notes)

GDP and Taxes. Taxes can only be levied as a percentage of GDP. Quicker GDP grows the more government’s ability to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase in debt there is no way the usa will survive economically without a massive increase in tax profits. The only way possible to increase taxes would be to encourage an enormous increase in GDP.

Encouraging Domestic Investment. During the 1950-60s income tax rates approached 90% for top income earners. The tax code literally forced high Income Tax Rates India 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 come up with tax revenue from the middle 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 in the expense of the US current economic crisis. Consumption tax polices beginning globe 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector among the US and reducing the tax base at an occasion when debt and a maturing population requires greater tax revenues.

The changes above significantly simplify personal income place a burden on. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based with a length of energy capital is invested quantity of forms can be reduced to a couple of pages.