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 such as those for race horses benefit the few in the expense on the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another's favorite charity?
Reduce a kid deduction in order to some max of three of their own kids. The country is full, encouraging large families is pass.
Keep the deduction of home mortgage interest. Owning a home strengthens and adds resilience to the economy. When the mortgage deduction is eliminated, as the President's council suggests, the country will see another round of foreclosures and interrupt the recovery of layout industry.
Allow deductions for expenses and interest on student loans. It is advantageous for federal government 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 mainly 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 revenue tax code was investment oriented. Today it is consumption concentrated. A consumption oriented economy degrades domestic economic health while subsidizing US trading young partners. 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 All investment in stocks and bonds ought to deductable just taxed when money is withdrawn out from the investment areas. The stock and bond markets have no equivalent for the real estate's 1031 flow. The 1031 industry exemption adds stability into the real estate market allowing accumulated equity to be taken for further investment.
GDP and Taxes. Taxes can simply be levied as being a percentage of GDP. The faster GDP grows the greater the government's capacity to tax. Due to the stagnate economy and the exporting of jobs along with the massive increase in the red there does not way the us will survive economically your massive craze of tax profits. The only way you can to increase taxes is encourage a tremendous increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s taxes rates approached 90% to your advantage 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 twin impact of skyrocketing GDP while providing jobs for the growing middle-class. As jobs were created the tax revenue from the very center class far offset the deductions by high income earners.
Today plenty of the freed income around the upper income earner has left the country for investments in China and the EU in the expense for the US method. Consumption tax polices beginning planet 1980s produced a massive increase inside of the demand for brand name items. Unfortunately those high luxury goods were more often than not manufactured off shore. Today capital is fleeing to China and India Tax Return Online blighting the manufacturing sector of the US and reducing the tax base at a period of time when debt and an ageing population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for making up investment profits which are taxed on the capital gains rate which reduces annually based using a length of your capital is invested quantity of forms can be reduced using a couple of pages.