Outlook for tax legislation in a divided Congress

By Robert Nihen

Now that the Democrats have taken control of the U.S. House of Representatives, many businesses and other taxpayers are asking what new tax legislation, if any, might come out of the divided 116^th Congress.

Few observers expect substantial new tax cuts or significant changes to the sweeping U.S. tax reform bill signed into law in late 2017. But that doesn’t mean all Congressional tax writing and related rule-making work will grind to a halt, says John Gimigliano, principal in charge of Federal Tax Legislative and Regulatory Services with KPMG LLP’s Washington National Tax practice.

“Areas of bipartisan Congressional accord could include expired tax provisions, retirement savings incentives, some technical corrections, administration of the IRS, and infrastructure-related tax issues,” Gimigliano says. “Still, much of the next two years will be less about making new law and more about each party presenting its case to the American voter on who should be making tax policy after the 2020 presidential elections.”

A new KPMG report – “Tax Policy and the 116th Congress: Observations and Preliminary Analysis” – maps the possible points of intersection and divergence in the likely tax agendas of Congressional Democrats and Republicans.

In addition to this analysis, the report offers an overview of the new Democratic-controlled House, new players in the GOP-controlled Senate, and changing priorities of the tax-writing committees. It also identifies tax and non-tax deadlines that could affect the legislative agenda.

Key questions considered in the new KPMG report include the following:

What factors might drive the kinds of tax provisions considered by the 116^th Congress, and what might actually become law?
Could Congress overhaul or fix parts of the 2017 U.S. tax reform law, commonly known as the Tax Cuts and Jobs Act?
Could Democrats and Republicans forge bipartisan consensus on certain expired provisions or other tax provisions?
Might a budget bill or other legislation serve as a vehicle for new tax provisions?
Could Congress consider a middle-income tax cut paired with rate increases for businesses and upper-income individuals?

For more information or to arrange an interview, please contact Robert Nihen.