November 6 election results for the next Congress indicate that Democrats have won sufficient seats to control the US House of Representatives, while Republicans are on track to retain and increase their majority in the US Senate.
While divided control of Congress will highlight differences between the two parties over tax policy and a range of other issues, bipartisan agreements still may be reached on certain issues such as targeted tax relief, infrastructure, trade, prescription drug pricing, and the opioid crisis. The 2017 tax reform act is expected to be the subject of numerous oversight hearings by the House Ways and Means Committee in a Democratic-controlled House, but divided government means dramatic changes to the 2017 legislation are unlikely.
The results of the 2018 midterm elections will have a significant impact on the direction of tax legislation over the next two years. The prospects for significant tax legislation, such as ‘tax reform 2.0’ proposals, in the new 116th Congress are expected to be limited as both parties seek to position themselves to compete in 2020 for control of the White House and Congress.
Still, there is the potential for divided government to reach agreement on select tax proposals, including technical corrections or other limited changes to the 2017 tax reform act. It remains uncertain whether President Trump and a divided Congress can reach agreements on more significant tax legislation, given differences between the two parties on how much tax should be paid by corporations and upper-income individuals, as well as many other tax issues.
Stakeholders will want to be involved during the lame-duck session as the current Congress possibly considers select tax issues and House and Senate members begin to organize for the 116th Congress.