With the Democrats winning control of the U.S. House of Representatives and Senate, the tax legislative outlook has shifted to new priorities and concerns, according to Mel Schwarz, a partner in Grant Thornton’s National Tax Office.
“Republican concerns with lower tax rates and encouraging individual investment will not be entirely pushed aside, but are expected to be joined by Democratic priorities such as providing health care and educational assistance through the tax code, as well as crafting business incentives in a way that encourages domestic employment and a sharing of any benefits with the workforce,” he said.
Particularly important will be whether the Democrats require that any tax cuts in one area be offset by tax increases in another area. Over the past six years, tax legislation has not been revenue-neutral, Schwarz noted.
“If the new Democratic majority in Congress insists that tax legislation generally be revenue-neutral, thereby requiring a tax cut in one area to be offset by a tax increase in another, the legislative debate will change,” he said.
