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

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

Reduce a child deduction to be able to max of three of their own kids. The country is full, encouraging large families is get.

Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. If the mortgage deduction is eliminated, as the President’s council suggests, the world will see another round of foreclosures and interrupt the recovery of market industry.

Allow deductions for educational costs and interest on student loan. Online IT Return Filing India pays to for federal government to encourage education.

Allow 100% deduction of medical costs and insurance policy. In business one deducts the cost of producing solutions. The cost at work is in part the maintenance of ones very well being.

Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior on the 1980s the income 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 All investment in stocks and bonds in order to deductable only taxed when money is withdrawn from the investment market. The stock and bond markets have no equivalent for the real estate’s 1031 pass on. The 1031 industry exemption adds stability to your real estate market allowing accumulated equity to be taken for further investment.

(Notes)

GDP and Taxes. Taxes can simply be levied as being a percentage of GDP. Quicker GDP grows the more government’s chance to tax. More efficient stagnate economy and the exporting of jobs coupled with the massive increase in debt there is very little way us states will survive economically with no massive development of tax proceeds. The only way possible to increase taxes would be to encourage a tremendous increase in GDP.

Encouraging Domestic Investment. Your 1950-60s income tax rates approached 90% for top income 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 dual impact of accelerating 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 plenty of the freed income out of your upper income earner leaves the country for investments in China and the EU in the expense for the US current economic crisis. Consumption tax polices beginning in the 1980s produced a massive increase a demand for brand name items. Unfortunately those high luxury goods were excessively manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector among the US and reducing the tax base at a time full when debt and an aging population requires greater tax revenues.

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