A Better Way—GOP Tax Policy

The House Republicans have proposed their updates to the US tax plan, titled A Better Way. Looking at the basics, it shares many similarities with that of Donald Trump’s plan. The plan takes much from the idea that the US tax system is too complex and broken. While having the backing of the Republican Party, House Democratic leader Nancy Pelosi and AFL-CIO have openly spoken against it.

Currently, the USA has seven tax brackets. According to this plan, those seven would be consolidated to the following three:

  • Those who were in the 10%, 15% bracket would now pay 12%
  • Those who were in the 25%, 28% bracket would now pay 25%
  • Those who were in the 33%, 35%, 39.6% bracket would now pay 33%

It is important to note the 0% tax bracket, which is not listed:

The new standard deduction is larger than the current-law standard deduction and personal exemptions combined. This, in effect, creates a larger 0% bracket. As a result, taxpayers who are currently in the 10% bracket always will pay lower taxes than under current law.

Other Notable Changes


This “blueprint” provides for reduced tax on investment income. Depending on which tax bracket one falls under, families and individuals will be able to deduct 50% of their net capital gains, dividends, and interest income, leading to basic rates of 6%, 12.5%, and 16.5%. There is also a want to get rid of the estate tax.

Corporate tax rate will drop from 35% to 20%. As we have seen, it seems at some point the corporate tax rate will drop. Every new plan has some sort of reduction of corporate tax.

All alternative minimum tax (AMT) will be removed, both at an individual and corporate level.

The IRS would undergo a complete overhaul, following the targeting scandal that it has been going through. The goal would be to break the IRS into three separate branches and the IRS commissioner would be subject to terms, mirroring the US government.

There are other changes from these that I listed that you can discover in the full report. The main goal is to significantly reduce the complexity and compliance burdens of the current system and therefore be able to finish your taxes on the back of a postcard.



The AFL-CIO took to Twitter to point out the similarities of this tax blueprint to the tax plan proposed by Donald Trump and criticize it for benefiting the wealthy.

Pelosi and the Democrats believe a plan like this will do erase the middle class, which is struggling enough already.



There are a lot of tax plans floating around. Do any of them hold weight? Which one is most likely to invoke change for the better?

I am an Editorial Associate at TaxConnections providing you with tax news from around the world.


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