With results still trickling in, the midterm election has mostly concluded and it appears that the Republican Party gained control over the House of Representatives while the Democrats maintained control over the Senate. It remains to be seen what this means for the legislative agenda for both President Biden and Congress, and questions remain when it comes to tax reform and the impact on your financial wellbeing.
In the short term, it appears unlikely that any tax reform package will occur between now and the end of the year. Moving forward after that, the question becomes whether any tax reform can be agreed upon by a Republican controlled House and a Democrat controlled Senate and then signed by President Biden. Depending upon the nature and extent of the measures covered by any tax reform, President Biden may be unwilling to sign legislation that is viewed as primarily benefiting high income/high net worth clients. If that is the case, the next time that we may see tax reform would be following the 2024 election cycle.
One item worth monitoring is whether a Republican controlled House will attempt to make certain provisions that were included in the Tax Cuts and Jobs Act (the “TCJA”) that was passed in 2017 permanent. To recall, the TCJA included certain provisions that are scheduled to sunset beginning in the year 2026. Certain members of Congress have repeatedly expressed a desire to make permanent those provisions from the TCJA, and there may now be an opportunity to attempt to make that legislation permanent. Allowing the TCJA to sunset as scheduled may be viewed as a tax increase by the public when reverting to pre-TCJA rules, and that may put the Biden administration in a delicate situation during the Presidential election cycle in 2024.
It also remains to be seen whether a Republican controlled House will attempt to unwind any of the measures passed earlier this year by the Inflation Reduction Act which added a corporate minimum tax for large companies and additional funding for the Internal Revenue Service.
The well-being of your family is important to us, and we are here to help you manage your wealth. Our Wealth Planning and Advisory team is a group of seasoned experts who can help you identify your family’s values, goals, and objectives, provide guidance on appropriate estate, philanthropic, and family governance structures, and work with you and your legal and tax advisors to implement on your strategies.
For more information and assistance with your planning and how the election results may impact you, please contact us or contact your Relationship Manager.