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 loans. Tax credits because those for race horses benefit the few at the expense belonging to the many.

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

Reduce a child deduction to a max of three of their own kids. The country is full, encouraging large families is get.

Keep the deduction of home mortgage interest. Buying strengthens and adds resilience to the economy. In the event 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 expenses and interest on student education loans. It is effective for federal government to encourage education.

Allow 100% deduction of medical costs and health insurance. In business one deducts the associated with producing everything. The cost on the job is in part the repair off ones health.

Increase the tax rate to 1950-60s confiscatory levels, but allow liberal deductions for “investments in America”. Prior to the 1980s revenue tax code was investment oriented. Today it is consumption focused. A consumption oriented economy degrades domestic economic health while subsidizing US trading friends. 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 All investment in stocks and bonds should be deductable in support taxed when money is withdrawn out from the investment advertises. The stock and bond markets have no equivalent into the real estate’s 1031 give eachother. The 1031 marketplace exemption adds stability into the real estate market allowing accumulated equity to be taken for further investment.

(Notes)

GDP and Taxes. Taxes can simply be levied as being a percentage of GDP. Quicker GDP grows the greater the government’s capacity to tax. Within the stagnate economy and the exporting of jobs along with the massive increase in debt there is very little way us states will survive economically without a massive trend of tax revenues. The only possible way to increase taxes would be to encourage a massive increase in GDP.

Encouraging Domestic Investment. Within 1950-60s taxes rates approached 90% for top 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 dual impact of skyrocketing GDP while providing jobs for the growing middle class. As jobs were come up with tax revenue from the very center class far offset the deductions by high efile Income Tax Return in India earners.

Today plenty of the freed income off the upper income earner has left the country for investments in China and the EU at the expense for the US method. Consumption tax polices beginning globe 1980s produced a massive increase inside of 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 belonging to the US and reducing the tax base at a period when debt and a maturing population requires greater tax revenues.

The changes above significantly simplify personal income tax. Except for accounting for investment profits which are taxed on the capital gains rate which reduces annually based with a length of your capital is invested the amount of forms can be reduced to a couple of pages.