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 credits. Tax credits while those for race horses benefit the few in the expense for this many.

Eliminate deductions of charitable contributions. Need to one tax payer subsidize another’s favorite charity?

Reduce the child deduction to be able to max of three children. The country is full, encouraging large families is overlook.

Keep the deduction of home mortgage interest. Buying 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 layout industry.

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

Allow 100% deduction of medical costs and insurance plan. In business one deducts the associated with producing everything. The cost of employment is simply 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 earnings tax code was investment oriented. Today it is consumption oriented. 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 All investment in stocks and bonds should be deductable just taxed when money is withdrawn from the investment markets. The stock and bond markets have no equivalent on the real estate’s 1031 give eachother. The 1031 property exemption adds stability to your real estate market allowing accumulated equity to be used for further investment.

(Notes)

GDP and Taxes. Taxes can essentially levied for a percentage of GDP. Quicker GDP grows the greater the government’s option to tax. Because of stagnate economy and the exporting of jobs coupled with the massive increase in the red there does not way the us will survive economically without a massive take up tax profits. The only way you can to increase taxes end up being encourage an enormous increase in GDP.

Encouraging Domestic Investment. Your 1950-60s tax rates approached 90% to your advantage efile Income Tax Return India earners. The tax code literally forced great living 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 skyrocketing GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the middle class far offset the deductions by high income earners.

Today lots of the freed income contrary to the upper income earner has left the country for investments in China and the EU in the expense of this US method. 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 from the US and reducing the tax base at a time full when debt and an ageing 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 using a length of energy capital is invested the amount of forms can be reduced using a couple of pages.