Overwhelmed by the Complexity of Taxes? This May Help

How to Handle Tax Reforms

The tax collection system is unfair. Those who rely on investments for income pay less tax. This widens the gap between the poor and the rich. Corporations, for instance, deduct their charitable donations, auto expenses, insurance and utilities. On the flip side, it’s not acceptable for an individual to deduct expenses. Those in the lower income bracket end up paying more taxes. This is unfair considering they have expenses like medical expense, insurance, utilities and rent.

Tax reforms are majorly centered on eliminating deductions and lowering rates. This doesn’t benefit low-income earners. Tax systems should have the same rules. Every type of income should be taxed. This way, revenue from investments will be treated just like ordinary income.

The tax system should be equitable to enable everyone utilize their expenses. Individual returns have to offer the same benefits to every taxpayer. The government should handle all incomes in the same way.
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All taxpayers need to be allowed to subtract their expenses. These deductions include charitable donations, maintenance of personal property, uniforms, investment expenses, food, tax preparation fees, insurance, transportation costs, rent and utilities. Just like corporations, normal taxpayers should deduct their everyday costs from their income.
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Unemployment compensation is claimed as income. Tax is levied on this income when one has expenses like gas, rent and health insurance. This is inconsiderate because the person has no job and needs to spend money while seeking a job.

They should be no limits on 401(k) plans. Saving for retirement is crucial. You have to save some money so you can retire comfortably. To do so, however, may be hard due to tax restrictions. Saving money can reduce the pressure set on Medicare and Social Security.

There shouldn’t be deductions for vacations, private jets and maintenance costs. Also, child support payments shouldn’t be deducted because the one paying the support has paid the tax. Base deductions and standard deductions should be eliminated from the tax system. This will address tax returns as well as improve fairness in taxation. Self-employment tax should be the same as employee tax. This will ensure that the amount of income won’t affect the tax rates. One doesn’t need to be penalized for running a business.

The tax code is in favor of individuals with money. The tax rates have to correspond to the actual expenses. This will allow everyone to pay taxes and afford to pay for various expenses. Additionally, people will have the ability save cash as well as grow financially. With more money to save, you can secure a better life after retirement.

Lawmakers can help in actualizing tax reforms. Basic items shouldn’t have high tax rates. Luxury items such as yachts, vehicles and TVs should be taxed higher. This would increase the annually collected tax.