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 at the expense belonging to the many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another's favorite charity?
Reduce a kid deduction in order to some max of three younger children. The country is full, encouraging large families is overlook.
Keep the deduction of home mortgage interest. Proudly owning strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President's council suggests, a rural area will see another round of foreclosures and interrupt the recovery of market industry.
Allow deductions for education costs and interest on student loan. It pays to for the government to encourage education.
Allow 100% deduction of medical costs and insurance plan. In business one deducts the cost of producing materials. The cost of employment is partly the maintenance of ones nicely.
Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for "investments in America". Prior to the 1980s revenue tax code was investment oriented. Today it is consumption driven. 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 All investment in stocks and bonds in order to be deductable only taxed when money is withdrawn among the investment areas. The stock and bond markets have no equivalent to the real estate's 1031 trading. The 1031 industry exemption adds stability to the real estate market allowing accumulated equity to supply for further investment.
(Notes)
GDP and Taxes. Taxes can essentially levied being a percentage of GDP. The faster GDP grows the greater the government's ability to tax. Given the stagnate economy and the exporting of jobs coupled with the massive increase in the red there is limited way the us will survive economically with no massive craze of tax proceeds. The only way you can to increase taxes end up being encourage an enormous increase in GDP.
Encouraging Domestic Investment. The actual 1950-60s taxes rates approached 90% for top level income 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 skyrocketing GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the guts class far offset the deductions by high income earners.
Today much of the freed income out of your upper income earner leaves the country for investments Online GST Registration In Mumbai Maharashtra China and the EU at the expense of the US financial system. Consumption tax polices beginning regarding 1980s produced a massive increase a 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 India blighting the manufacturing sector of the US and reducing the tax base at an occasion when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax. Except for making up investment profits which are taxed at a capital gains rate which reduces annually based with a length of your capital is invested the number of forms can be reduced along with couple of pages.