Income Tax reform
I believe if we simplify the income tax system we can increase revenue and promote higher economic growth. Nobody likes to pay taxes, but without tax revenue and the ability to collect taxes you cannot have a civilized society.
The American People’s biggest complaint of our tax system is that it is to complex and it is not fair. The cost of compliance of our present system is very expensive and it distorts economic decisions. The rich, Powerful, and the crooks do not pay their fair share. I believe strongly in the ability to pay principle. The income tax enables you to apply this principle. The present tax system needs to be simpler and fairer. The IRS estimates a tax gap of at least 300 Billion dollars in taxes that are not being paid.
My changes will make it easier to collect the taxes that are not presently being paid. The first change is to repeal all the special laws that benefit one individual or corporation. The first change is to eliminate 22 lines on the 2007 1040. The biggest change is eliminating schedule A and the Alternative minimum Tax. The next big change is that dividends and capital gains are taxed as ordinary income. Municipal Interest and deferred annuities are taxed as ordinary income. The only qualified plans Are 401k and IRA’S. The simple, SEP, 403B, and Roth IRA are eliminated. Under my plan most forms are eliminated. The earned income credit and the child credits are the only deductions for individuals. The home office deduction is eliminated. There is no property tax, medical deduction, charitable deduction, or mortgage interest Deduction. The present system benefits the top 10%. Now everybody will be on a level field. There are no deductions. If you do not have a Schedule C most taxpayers will be able to do their own tax returns. For senior taxpayers the zero brackets for social security will rise to 35,000 for individuals and 46,000 for married couples.
All special laws for corporations will be repealed. All Credits for corporations will be repealed. The LIFO method of accounting will be eliminated for taxes. Section 199 and all similar laws will be repealed. The LLC and the S Corp will be eliminated. They will be taxed like a C Corp. All depreciation will be straight line. Real estate is depreciated over forty years.
The tax rate will be 15% for the first million of taxable income and a 20 percent rate for everything over that. Foreign taxes paid will be expensed rather than a credit. All worldwide income will be taxed. It does Not have to be sent back to the United States to be taxed like present law. The alternative minimum tax for corporations will be eliminated I believe, if the income tax system is simplified, billions of hours of time will be saved under this system.
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