- Biden looks to overhaul reform Trump administration tax policies
- Will this be possible if Congress remains divided?
- Congressional division might be beneficial to the market
With the current ticket set for Joe Biden as President-elect and Congress as being wholly divided, taxpayers are wondering: if this is the case, will anything be accomplished? Specifically, will any of Biden’s proposed tax plans go through Congress if both House and Senate are split?
Biden has promised Americans a busy first day in office ticking off the number one item on his to-do list: repeal President Trump’s tax cuts. Given the recent history of Congressional division in passing a second stimulus bill, it seems unlikely that any reform will take place with immediate action. Whereas Trump forged his own path to legislation through a Democrat-controlled House during his term, Biden is predicted to rely heavily on that majority and a commitment to compromise. Business consultant Roger Harris said in an interview with Accounting Today: “the House will have to find tax things that both parties agree on, so there might be some tradeoffs. It’s possible there could be a little raise in the corporate rate if the Democrats give the Republicans something they want.” Still, the uncertain future of the Senate—currently on track for a Republican majority—remains one of Biden’s biggest roadblocks should he go through with tax cuts or, better yet, should he initiate movements on a new COVID-19 relief bill.
Another uncertainty, but one with good prospects: investment analysts predict success for the market since stocks have historically performed well under the conditions of a divided congress. Chief Market Strategist at Ameriprise, David Joy, explains: “If the government remains divided, as appears likely, markets historically are said to take some comfort in the prospect of policy gridlock.”
What is your prediction? Share your thoughts with us via email or call us at 516-541-6549. Check out our DSJCPA COVID-19 Information Center to speak with a member of our Coronavirus Response Team (CRT).
Associate, Creative Solutions
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