Prospects for action on President-elect Joe Biden’s tax proposals have increased significantly with Georgia Senate runoff election results putting Democrats on track to control the Senate as well as the House. Based on unofficial results, Democratic candidate Raphael Warnock is projected by the Associated Press to have defeated incumbent Senator Kelly Loeffler (R-GA) and Democratic candidate Jon Ossoff is leading former Senator David Perdue (R-GA). Democratic victories in the two Georgia races would result in a 50-50 Senate with the tie-breaking vote of Vice President-elect Kamala Harris giving Democrats a de facto 51-50 majority.
Key Biden business tax proposals include increasing the US corporate tax rate to 28% and rolling back income and estate tax reductions from the 2017 tax reform act for taxpayers with incomes above $400,000.
The results of the 2020 election cycle will have a significant impact on the direction of tax policy. Businesses and individuals will want to examine the proposed tax changes and their potential impact on job creation, cash flows, investments, and deals. Actions to consider include modeling the effects of the proposed legislation outlined above, considering steps that can be taken to lock in value in advance of possible tax law changes, managing risk, and assessing interaction with proposed changes outside the United States. Companies should also consider engagement with policymakers in Congress and the Biden administration.