TAX TAKE: Purple Rain - House and Senate Midterm Elections
Last week's midterm elections will have reverberations in Washington, particularly from a tax policy perspective. Democrats retained control of the Senate but, at Tax Take's press time, neither party had secured control of the House of Representatives as votes are still being counted nationally.
One seat in Georgia remains to be determined in the Senate, where Senator Raphael Warnock (D-GA) and Republican candidate Herschel Walker are headed to a run-off on December 6 since neither of them gained the required 50 percent of the vote. In the House, Republicans are still favored to retake control – albeit by a very narrow and likely single-digit margin. That said, Democrats still have a small chance to retain control of the House should they run the tables in the remaining undecided House elections.
Why does this matter for the tax policy agenda?
- As in Article I, Section 7, Clause 1 of the U.S. Constitution, let's start with the House. If Republicans retake the majority in the House, there will be new leadership - including on the Committee on Ways and Means, since Representative Kevin Brady (R-TX) is retiring at the end of this Congress. The three candidates vying to be the next Chairman are Representatives Vern Buchanan (R-FL), Jason Smith (R-MO), and Adrian Smith (R-NE). The winner is expected to be announced later this month. But whoever takes the gavel, we expect the House Republican tax agenda to be focused on making key provisions in the 2017 Tax Cuts & Jobs Act (TCJA) permanent, as well as robust IRS oversight activity and efforts to repeal provisions of the Inflation Reduction Act.
- In the upper chamber, Senator Ron Wyden (D-OR) will remain Chairman of the Committee on Finance where he will certainly oppose any Republican efforts at TCJA permanency.
As the dust settles on the midterm elections, stay tuned for additional insights from your friends at Tax Take on the makeup of the tax-writing committees and the upcoming tax agenda for lame duck and next year. #TaxTake
Upcoming Speaking Engagements and Events
On December 1, Marc will speak at the 2022 BCBS National Tax Conference. His panel will discuss federal and state tax policy developments.
In the News
In Tax Notes, Jorge discussed IRS Commissioner Charles Rettig's Legacy saying it is "more than fair to say he did an exemplary job," considering the difficult cards he was dealt leading the IRS during the COVID pandemic. Jorge added that Rettig - a Trump Administration appointee - deserved credit for getting Congress and the Biden Administration to make funding the IRS a priority. Rettig "was able to rise above his appointment by the previous Administration, and I think it's fair to say that he was considered an honest broker," Jorge said.
Jorge commented on President Biden's selection of Daniel Werfel to serve as the next IRS Commissioner in Tax Notes. Jorge said Werfel "certainly has all the experience to be successful." Jorge also noted that Werfel's "ﬁnancial and budget expertise," from his time at OMB, "is obviously going to be extremely beneﬁcial and important right now."
In The Wall Street Journal, Jorge commented on a letter sent by 178 CFOs of large U.S corporations asking Congress to repeal a change to R&D tax rules that eliminated the ability to deduct certain R&D expenses immediately. Jorge said "when you spread out the deduction over five years, that is less powerful than incurring the deduction in the first year."
In CNBC, Marc was quoted on the issue voters considered as they voted in the midterm elections saying "the overall economy has been so important, and I think it really is influencing the elections."
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