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 loans. Tax credits with regard to example those for race horses benefit the few in the expense belonging to the many.

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

Reduce your son or daughter deduction to a max of three small. The country is full, encouraging large families is carry.

Keep the deduction of home mortgage interest. Home ownership strengthens and adds resilience to the economy. If the mortgage deduction is eliminated, as the President’s council suggests, the country 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 brand new to encourage education.

Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing everything. The cost on the job is partly the upkeep of ones health.

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 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 All investment in stocks and bonds always be deductable and only taxed when money is withdrawn from the investment niches. The stock and bond markets have no equivalent on the real estate’s 1031 trading. The 1031 real estate exemption adds stability on the real estate market allowing accumulated equity to be taken for further investment.

(Notes)

GDP and Taxes. Taxes can only be levied as the percentage of GDP. The faster GDP grows the more government’s option to tax. Because of stagnate economy and the exporting of jobs along with the massive increase owing money there is limited way the states will survive economically with massive increase in tax gains. The only possible way to increase taxes through using encourage a massive increase in GDP.

Encouraging Domestic Investment. Within 1950-60s income tax rates approached 90% for the top 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 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 lots of the freed income from the upper income earner leaves the country for investments in China and the EU in the expense among the US current economic crisis. Consumption tax polices beginning planet 1980s produced a massive increase in the demand for GST Application Mumbai Maharashtra 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 in the US and reducing the tax base at a period of time when debt and a maturing population requires greater tax revenues.

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