Income tax to Encourage Investment

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 snack bars. Tax credits pertaining to instance those for race horses benefit the few in the expense belonging to the many.

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

Reduce a kid deduction the max of three small. 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 country 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 insurance policy. In business one deducts the price producing solutions. The cost of training is simply the maintenance of ones nicely.

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 All investment in stocks and bonds ought to deductable just taxed when money is withdrawn using the investment niches.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

(Notes)

GDP and Taxes. Taxes can only be levied as the percentage of GDP. The faster GDP grows the more government’s chance to tax. Due to the stagnate economy and the exporting of jobs coupled with the massive increase with debt there is limited way the us will survive economically your massive development of tax revenues. The only possible way to increase taxes is encourage a tremendous increase in GDP.

Encouraging Domestic Investment. During the 1950-60s income tax rates approached 90% to find 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 Online GST Registration Pune Maharashtra 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 center class far offset the deductions by high income earners.

Today lots of the freed income around the upper income earner has left the country for investments in China and the EU in the expense with the US method. Consumption tax polices beginning globe 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 among the US and reducing the tax base at a time full when debt and an ageing population requires greater tax revenues.

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