Midterm elections have reshaped Congressional tax-writing committees; giving Republicans greater control in shaping tax policy next year
The midterm elections have changed the Congressional landscape. In the 112th Congress, Republicans picked up at least 60 seats, far more than the 39 they needed for a majority, and will control the House of Representatives resulting in the biggest shift in power since Democrats lost 75 House seats in 1948. They picked up seats in the Senate as well, although Democrats will continue to control the upper chamber.
The election results may affect pending tax legislation such as the “tax extenders” legislation that would renew various expired tax provisions such as Code Sec. 954(c)(6) and the research credit during the upcoming Congressional “lame-duck” session. Prior to the election, leadership of boththe House and the Senate expressed support for the legislation which is completely paid for as part of the revenue-raising provisions. Senate Majority Leader Harry Reid (D-NV), said that the agenda for the lame duck session, which begins the week of November 15, had not been finalized. “We are going to have a number of meetings with our caucus before we get into specificity,” Reid said. “We have a number of things we have to work through.”
We believe that we will see little tax policy during the “lame duck” session and due to the shift in power more moderate tax policy in 2011 and 2012. This should result in more advantageous tax policy, but we do not believe to the extent of the Bush tax cuts. Please see our prior blog posts for our overall position on how we believe tax rates and policy will be effected in the coming year.
Here are some of the major changes in tax policy landscape for the 112th Congress.
The U.S. House of Representatives
While the official leadership of the House will not be chosen until next January, it is largely expected that John Boehner (R-OH) will replace Nancy Pelosi(D-CA) as the speaker of the House. Eric Cantor (R-VA) will likely assume the role of majority leader. Earlier on November 3, Sen. Harry Reid said that he already maintained a good working relationship with Boehner.
House Ways and Means Committee
The current tax-writing House Ways and Means Committee under acting Chairman Sander Levin (D-MI) is comprised of 26 Democrats and 15 Republicans. The increase in the number of seats held in the House by Republicans means that there will be a resulting influx of Republicans on the Ways and Means Committee and that many Democrats will lose their positions on the panel. Current ranking member Rep. Dave Camp (R-MI) is expected to become the new Chairman of the House Ways and Means Committee.
The Senate Democrats lost at least six seats, but narrowly held their majority. Sen. Majority Leader Reid survived a tough re-election for his own Senate seat against Republican Sharron Angle.
Senate Finance Committee
Under the current 111th Congress, the Senate Finance Committee is comprised of 13 Democrats and 10 Republicans. Although the committee is expected to remain largely intact, it will lose Sen. Blanche Lincoln (D-AR) who lost her re-election bid and Sen. Jim Bunning (R-KY) who is retiring. Sen. Max Baucus (D-Montana), who was not up for re-election in 2010, will continue as Chairman.