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 attributes. Tax credits because those for race horses benefit the few at the expense of the many.

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

Reduce your son or daughter deduction to a max of three of their own kids. The country is full, encouraging large families is successfully 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, a rural area will see another round of foreclosures and interrupt the recovery of layout industry.

Allow deductions for educational costs and interest on student loan. It is advantageous for brand new to encourage education.

Allow 100% deduction of medical costs and insurance coverage. In business one deducts the price producing materials. The cost of employment is simply the maintenance of ones health.

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 All investment in stocks and bonds ought to deductable in support taxed when money is withdrawn over investment markets.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

(Notes)

GDP and Taxes. Taxes can fundamentally be levied being a percentage of GDP. The faster GDP grows the greater the government’s option to tax. Due to the stagnate economy and the exporting of jobs along with the massive increase in difficulty there is no way us states will survive economically with no massive take up tax gains. The only possible way to increase taxes is to encourage a massive increase in GDP.

Encouraging Domestic Investment. The actual 1950-60s tax rates approached 90% for top level Efile income tax return in india 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 growing GDP while providing jobs for the growing middle class. As jobs were come up with tax revenue from the very center class far offset the deductions by high income earners.

Today via a tunnel the freed income out of your upper income earner leaves the country for investments in China and the EU at the expense for the US economy. Consumption tax polices beginning in the 1980s produced a massive increase planet demand for brand name items. Unfortunately those high luxury goods were constantly manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector from 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 tax. Except for comprising investment profits which are taxed from a capital gains rate which reduces annually based around the length of capital is invested amount of forms can be reduced using a couple of pages.