January 8, 2021 - Douglas Myser

A biden presidency and your taxes. On January 5th, 2021, two Georgia Senate elections will decide the majority in the Senate and how the next several years in the political spectrum will play out. If Democrats sweep both seats and get a 50-50 split in the Senate, there is nothing stopping President Biden from putting his stamp on the tax law. He could pass his vision of tax reform without a single vote from a Republican. This is made possible by a little thing called "Budget Reconciliation", a streamlined process for passing bills that comes in particularly handy when the same party controls the White House, House of Representatives, and the Senate. As part of the process, when a bill gets to the Senate, instead of needing the standard 60 votes for passage, it instead requires only a simply majority, 51 votes. Of course, at best, Democrats can hold only 50 seats. That matters not: in the event of a 50-50 tie, Vice President Kamala Harris would cast the tie breaking vote and that vote in only going in one direction. A biden presidency and your taxes.

Budget reconciliation can only be used for bills that impact revenue or spending, so tax proposals are fair game. For proof of that fact, you need look no further than the 2017 Tax Cuts and Jobs Act, a $1.5 trillion tax cut passed by President Trump without a single vote from a Democrat by using reconciliation. Of course Biden would have zero margin for dissent: even if a single Democrat didn't vote for his tax plan, it would fail.

But if everything falls in place: if Democrats win both Senate seats, and then the House and Senate pass a joint budget, earmarking the reconciliation process for a tax bill, and then draft up a tax bill, there would be nothing the Republicans could do to stop it. And since that possibility is still in play, perhaps we should remind ourselves exactly what it is Joe Biden has proposed. Biden has made no secret of his desire to raise nearly $3.5 trillion in additional tax revenue, though he has repeatedly assured voters that those earning less than $400,000 annually will not experience any increase in their tax bills.