With Democratic victories for the two U.S. Senate seats in Georgia, the Democrats now have control of the U.S. House of Representatives, Senate, and the presidency. With Democratic leadership comes the likelihood of significant changes to current individual income, corporate, gift and estate tax laws. However, given the slim majorities of the Democrats in the House and Senate, aggressive tax policy changes may still face an uphill battle. A review of the legislative process for passing federal tax law may help us better understand how and when proposed tax changes may occur.

Show Notes:

Important Disclosures: https://www.bosinvest.com/disclosures.
Diagram of How Federal Tax Laws Are Passed: https://www.bosinvest.com/wp-content/uploads/2021/02/How-Do-Federal-Tax-Laws-Get-Passed.png

[1] The Byrd Rule defines a provision to be "extraneous"—and therefore ineligible for reconciliation—in six cases: 1) It does not have a budgetary effect; 2) It has a budgetary effect, but the effect is not what the budget resolution called for; 3) It’s outside the jurisdiction of the committee recommending it; 4) It does have a budget effect, but a “merely incidental” to the nonbudgetary components of the provisions; 5) It increases the deficit beyond a certain number of years (usually a period of ten years); or 6) It is about Social Security.

Sources:

Wikipedia, “Reconciliation (United States Congress),” https://en.wikipedia.org/wiki/Reconciliation_(United_States_Congress)

Wikipedia, “Reconciliation (United States Congress): Byrd Rule,” https://en.wikipedia.org/wiki/Reconciliation_(United_States_Congress)#Byrd_Rule