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 credit. Tax credits pertaining to instance those for race horses benefit the few in the expense on the many.
Eliminate deductions of charitable contributions. Need to one tax payer subsidize another's favorite charity?
Reduce a child deduction to be able to max of three children. 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, the will see another round of foreclosures and interrupt the recovery of structure industry.
Allow deductions for education costs and interest on student education loans. It pays to for federal government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the cost of producing goods. The cost of training is simply the repair off ones very well being.
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 concentrated. 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 All investment in stocks and bonds in order to deductable merely taxed when money is withdrawn out from the investment advertises. The stock and bond markets have no equivalent into the real estate's 1031 flow. The 1031 real estate exemption adds stability on the real estate market allowing accumulated equity to supply for further investment.
GDP and Taxes. Taxes can simply be levied for a percentage of GDP. The faster GDP grows the greater the government's chance to tax. Due to the stagnate economy and the exporting of jobs coupled with the massive increase in difficulty there is limited way the us will survive economically your massive take up tax gains. The only possible way to increase taxes is to encourage huge increase in GDP.
Encouraging Domestic Investment. Through the 1950-60s taxes rates approached 90% to your advantage 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 twin impact of accelerating GDP while providing jobs for the growing middle-class. As jobs were come up with the tax revenue from the middle class far offset the deductions by high income earners.
Today via a tunnel the freed income contrary to the upper Online Income Tax Filing India earner has left the country for investments in China and the EU at the expense of this US method. Consumption tax polices beginning planet 1980s produced a massive increase in the 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 a period of time when debt and an aging population requires greater tax revenues.
The changes above significantly simplify personal income tax bill. Except for comprising investment profits which are taxed at capital gains rate which reduces annually based around the length associated with your capital is invested amount of forms can be reduced using a couple of pages.