Primary Principle – Taxes should be used primarily to fund government operations and not for economic incentives. Too often breaks have unintended consequences and fail to stimulate the economy.

Personal Income Tax

Eliminate AMT and all tax credits. Tax credits such as those for race horses benefit the few at the expense for this many.

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

Reduce a kid deduction to be able to max of three younger children. The country is full, encouraging large families is carry.

Keep the deduction of home mortgage interest. Home ownership 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 the construction industry.

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

Allow 100% deduction of medical costs and insurance policy. In business one deducts the associated with producing everything. The cost at work is in part the upkeep of ones health.

Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior into the 1980s salary tax code was investment oriented. Today it is consumption oriented. 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 All investment in stocks and bonds always be deductable just taxed when money is withdrawn using the investment niches. The stock and bond markets have no equivalent for the real estate’s 1031 give eachother. The 1031 industry exemption adds stability to your real estate market allowing accumulated equity to be used for further investment.

(Notes)

GDP and Taxes. Taxes can only be levied for 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 coupled with the massive increase in debt there does not way us states will survive economically with massive take up tax earnings. The only way you can to increase taxes is encourage an enormous increase in GDP.

Encouraging Domestic Investment. During the 1950-60s tax rates approached 90% for the top income earners. The tax code literally forced financial security 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 middle class far offset the deductions by high income earners.

Today lots of the freed income contrary to the upper income earner leaves the country for investments in China and the EU in the expense among the US current economic crisis. Consumption tax polices beginning regarding 1980s produced a massive increase in the 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 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 place a burden on. Except for making up investment profits which are taxed from a capital gains rate which reduces annually based upon the length of time capital is invested the number of forms can be reduced together with a couple of pages.