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 while those for race horses benefit the few in the expense for this many.

Eliminate deductions of charitable contributions. So here is one tax payer subsidize another’s favorite charity?

Reduce the youngster deduction to be able to max of three of their own kids. The country is full, encouraging large families is successfully pass.

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

Allow deductions for expenses and interest on so to speak .. It is effective for federal government to encourage education.

Allow 100% deduction of medical costs and health insurance. In business one deducts the price producing solutions. The cost of labor is partially the upkeep of ones health.

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 All investment in stocks and bonds in order to be deductable in support taxed when money is withdrawn using the investment markets.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

(Notes)

GDP and Taxes. Taxes can essentially levied as the percentage of GDP. Quicker GDP grows the more government’s capacity to tax. Within the stagnate economy and the exporting of jobs coupled with the massive increase with debt there is no way the us will survive economically with no massive development of tax revenues. The only possible way to increase taxes would be to encourage huge increase in GDP.

Encouraging Domestic Investment. Through the 1950-60s tax rates approached 90% for top level 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 twin impact of growing GDP while providing jobs for the growing middle class. As jobs were come up with the tax revenue from the guts class far offset the deductions by high Income Tax Rates India earners.

Today much of the freed income from the upper income earner has left the country for investments in China and the EU in the expense for the US current economic crisis. Consumption tax polices beginning regarding 1980s produced a massive increase planet demand for brand name items. Unfortunately those high luxury goods were frequently manufactured off shore. Today capital is fleeing to China and India blighting the manufacturing sector of the US and reducing the tax base at a period of time when debt and a maturing population requires greater tax revenues.

The changes above significantly simplify personal income in taxes. Except for comprising investment profits which are taxed at a capital gains rate which reduces annually based around the length of your capital is invested quantity of forms can be reduced along with couple of pages.