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 with regard to example those for race horses benefit the few at the expense for this many.

Eliminate deductions of charitable contributions. Is included in a one tax payer subsidize another’s favorite charity?

Reduce a kid deduction together with a max of three younger children. The country is full, encouraging large families is pass.

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

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

Allow 100% deduction of medical costs and insurance plan. In business one deducts the price producing everything. The cost of employment is in part the upkeep 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 concentrated. 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investment Online GST Registration in Mumbai Maharashtra stocks and bonds always be deductable just taxed when money is withdrawn out from the investment niches.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 for the real estate market allowing accumulated equity to supply for further investment.

(Notes)

GDP and Taxes. Taxes can simply be levied as being a percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Given the stagnate economy and the exporting of jobs along with the massive increase owing money there is no way the states will survive economically without a massive development of tax profits. The only possible way to increase taxes is to encourage huge increase in GDP.

Encouraging Domestic Investment. Your 1950-60s taxes 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 twin impact of accelerating GDP while providing jobs for the growing middle-class. As jobs were came up with tax revenue from the center class far offset the deductions by high income earners.

Today much of the freed income around the upper income earner has left the country for investments in China and the EU in the expense of this US current economic crisis. Consumption tax polices beginning globe 1980s produced a massive increase regarding demand for brand name items. Unfortunately those high luxury goods were too often manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector of the US and reducing the tax base at a period 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 from a capital gains rate which reduces annually based around the length of time capital is invested variety of forms can be reduced along with couple of pages.