What Will Happen To The Tax Laws After The Election? – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.ā„¢

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be anĀ INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Advisor News
Top Stories RSS Get our newsletter
Order Prints
November 2, 2020 Top Stories No comments
Share
Share
Tweet
Email

What Will Happen To The Tax Laws After The Election?

By H. Joseph Price Jr.

By now, you have likely heard this question from some of your clients because they read it on various news websites and social media channels.

Before you answer that question, keep in mind that when President Donald Trump won the election four years ago, with everything going their way, the Republican party was not able to pass a tax cut until December 2017. And it was touch-and-go on whether the tax cut would pass just one week before it actually happened.

What do I mean by ā€œthe GOP had everything going their way?ā€ At the time, they controlled both houses of Congress, Trump was in the White House, the economy was excellent and they were trying to pass a tax cut, which is much easier than trying to pass a tax increase. The conclusion to draw from that experience is that comprehensive tax acts are not easy to make happen. And they don’t happen quickly.

Related stories

  • Fed slows rate hikes even as Powell says there's more work to do
  • Mortgage rates in U.S. fall again, hit 6.09%

So with that in mind, how do you answer a client who asks you what is going to happen to the tax law?

Here is what I would tell your client: First, if the Democrats don’t flip the Senate, it won’t matter if Joe Biden wins the presidency. Senate Majority Leader Mitch McConnell has shown that he does not care how much criticism he receives. He is not going to let the Democrats pass any legislation that he is opposed to.

Second, because the Democrats aren’t going to have 60 seats in the Senate no matter how big the ā€œblue waveā€ is, there will be only two paths to passing a tax increase: killing the filibuster for all time or reconciliation. As to the first, the Democrats may be willing to kill the filibuster since it is already dead for purposes of approving federal judges. But there may still be some reluctance to take such a critical step because of concern about what the Republicans might do if they have the majority in the Senate after 2020, so reconciliation is more likely.

So, what is reconciliation? The simplified definition is that it is the process that can be used to pass revenue and spending legislation if one’s party does not have 60 votes to overcome a filibuster by the opposing party. It must be used in connection with a budget resolution. If the bill violates the spending and revenue targets of the budget resolution, then any senator can raise a point of order that requires 60 votes to overcome. Generally, tax bills passed by reconciliation expire after 10 years.

The important point is that tax bills passed by reconciliation have a number of procedural hurdles to overcome, so getting them passed is not a foregone conclusion for the party with more than 50 but fewer than 60 votes.

The next question is, ā€œIf the Democrats are able to pass a tax increase, are they more likely to increase the estate tax, the income tax or both?

My prediction is only an income tax increase. The primary reason is that any tax increase will be difficult to pass because the Republicans will fill the airwaves with talk that a tax increase will hinder the financial recovery from the current recession.

Passing one tax increase will be a heavy lift. If the Democrats have to choose one tax or the other, they will most likely opt for an income tax increase because it will generate far more tax revenue than an estate tax increase. In addition, the Democrats will be looking for a way to cut into 2020’s $3.1 trillion deficit. The existing estate tax exemption drops by 50% as of Jan. 1, 2026, anyway, so the Democrats may believe that the political capital they would have to expend to accomplish something that will take care of itself in five years is not worth the cost.

Dysart Taylor shareholder/directorĀ H. Joseph PriceĀ Jr. helps businesses and individuals plan for their future through estate planning, tax planning, business succession planning and wealth preservation. He may be contacted atĀ  [email protected].

Ā© Entire contents copyright 2020 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Ready or Not: The Year That Pushed Advisors Into Tech

Newer

An Election Pattern You Might Not Know About

Advisor News

  • Fed slows rate hikes even as Powell says there's more work to do
  • Mortgage rates in U.S. fall again, hit 6.09%
  • 1 in 3 Americans struggling financially but goal-setting is a game-changer
  • Advisors bet on US stocks to outperform in 2023 amid tech rebound
  • Investors want more ESG information from companies
More Advisor News

Annuity News

  • Study: Does pessimism really suppress annuity sales?
  • Sweet streams of income: ChatGPT, the bard of annuities
  • F&G Annuities & Life announces equity investment in life IMO SYNCIS
  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
Sponsor
More Annuity News

Health/Employee Benefits News

  • State: all insurers failed to comply with Oregon Reproductive Health Equity Act
  • Will plan fix California health care?
  • Insurance giant Elevance to move into 15th state
  • Medicare card scam targets seniors for personal info
  • Yes, states are re-checking Medicaid and CHIP eligibility starting in April
More Health/Employee Benefits News

Life Insurance News

  • Maid's son tells judge Alex Murdaugh took $4M for her death
  • Chris Wilson tells court former friend Murdaugh confessed he was ā€˜stealing money’
  • State's motive testimony could prolong Alex Murdaugh murder trial
  • Equitable expands portfolio in VUL market
  • New date set for billionaire suspect accused of bribing state cabinet member
More Life Insurance News

- Presented By -

Top Read Stories

  • Chicago news roundup: PPP fraud uncovered in Chicago, informant reveals $100K bounty on FBG Duck and more
  • Gov. Carney: Enrollment on Delaware's Health Insurance Marketplace for 2023 Reaches All-Time High
  • 25 people charged in fake nursing diploma operation
  • Connecticut addressing broker shortage amid The Great Unwinding
  • Pennsylvania woman sentenced in elderly fraud case
More Top Read Stories >

FEATURED OFFERS

Meet Encova Life
We know agents matter. You can count on our life team to be high tech, high touch and responsive.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
Ā© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.