Tax policy and the 116th Congress

The 116th Congress began on January 3, 2019—with the Democrats controlling the House and the Republicans controlling the Senate and the White House. The return to "divided government" raises a host of questions as to what to expect in the near future, including questions in the tax policy area.

January 14, 2019 | KPMG report: Tax Policy and the 116th Congress—Observations and Preliminary Analysis describes the new House, the new Senate, and the tax-writing committees and makes observations about the possible tax agenda.

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Video: Prospects for tax legislation

KPMG's John Gimigliano, principal in charge of  the Federal Legislative & Regulatory Services group in the firm's Washington National Tax practice, provides his high-level thoughts on what tax legislation might come out of the divided 116th Congress in this video short. [1:06 minutes] 


Video transcript:

In late 2017, the Republican-controlled Congress passed the most sweeping tax reform we’ve seen in more than 30 years.

But now Democrats hold a firm majority in the House, and the question is what tax legislation might come out of the divided 116th Congress? The short answer—not much.

Now listen, Congress could reach bipartisan agreement on certain less contentious and maybe less consequential issues. . .

. . .  issues such as the expired tax provisions, retirement savings incentives, administration of the IRS, or  perhaps even a path forward on infrastructure-related tax issues.

But the reality is that we’ll probably see gridlock on major tax legislation.

In reality, much of the next two years will likely be less about making new tax law and more about each party presenting its case to the American voter on who should be making tax policy after the 2020 elections.

So both sides of the aisle in Congress will be talking to us—the voters. And at KPMG, we’ll be listening.

The U.S. House of Representatives

The U.S. Senate

Key questions for tax policy in 2019

What does a divided U.S. Congress mean for the future of tax legislation? KPMG's report examines these and other top-of-mind questions regarding the prospects for enacting new tax laws:

  • What kinds of tax legislation might be enacted during the new Congress?
  • What factors might drive the kinds of tax provisions considered, and what might actually become law?
  • Might parts of the 2017 tax legislation commonly known as the “Tax Cuts and Jobs Act” be overhauled or fixed?
  • Might there be bipartisan consensus on expired provisions or other tax provisions?
  • Might a budget bill or other legislation serve as a vehicle for tax provisions?
  • Could Congress consider a middle-income tax cut paired with rate increases for businesses and upper-income individuals?
  • What about the Supreme Court’s Wayfair decision on state internet sales taxes and other state-related tax legislation?


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