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 with regard to example those for race horses benefit the few at the expense of the many.
Eliminate deductions of charitable contributions. Why should one tax payer subsidize another's favorite charity?
Reduce the child deduction the max of three children. 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. In case the mortgage deduction is eliminated, as the President's council suggests, the will see another round of foreclosures and interrupt the recovery of the construction industry.
Allow deductions for education costs and interest on figuratively speaking. It is effective for the government to encourage education.
Allow 100% deduction of medical costs and health insurance. In business one deducts the cost of producing solutions. The cost on the job is in part 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 towards 1980s salary 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 GST Registration online Pune Maharashtra 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 All investment in stocks and bonds ought to deductable just taxed when money is withdrawn out from the investment areas.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 towards the real estate's 1031 trading. The 1031 industry exemption adds stability for the real estate market allowing accumulated equity to be taken for further investment.
GDP and Taxes. Taxes can essentially levied as being a percentage of GDP. The faster GDP grows the more government's capacity to tax. Due to the stagnate economy and the exporting of jobs along with the massive increase in debt there isn't really way united states will survive economically with no massive development of tax revenues. The only way possible to increase taxes end up being encourage an enormous increase in GDP.
Encouraging Domestic Investment. Your 1950-60s income tax rates approached 90% for the top income earners. The tax code literally forced high income 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 growing GDP while providing jobs for the growing middle-class. As jobs were developed the tax revenue from the very center class far offset the deductions by high income earners.
Today much of the freed income around the upper income earner leaves the country for investments in China and the EU at the expense of this US economy. Consumption tax polices beginning globe 1980s produced a massive increase a 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 blighting the manufacturing sector belonging to 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 bill. Except for making up investment profits which are taxed in a very capital gains rate which reduces annually based on the length of capital is invested the number of forms can be reduced to a couple of pages.