This past week we elected some old and some new people to represent us. We are about to see the largest shift in Congress in half a century with Republicans picking up 61 seats in the House. What does this mean in tax land?
This shift will alter the nature of the House Ways and Means Committee - the committee that writes tax laws. Currently it has 26 Democrats and 15 Republicans. Come January that ratio is likely to flip-flop, becoming over 60% Republican. The changes in the Senate Finance Committee will be less significant.
But before we get to January we have a Lame Duck session to wade through. Many anticipate that taxes will be the major productive work addressed in the last month of the year. These sessions are usually unpredictable. Those who have lost their seat and do figure to return can move toward what they think is best without regard to the political fall-out. The Democrats will want to move a few things forward before losing power, allowing them to boast about what they've accomplished. Republicans will welcome the new-found cooperation, but politically they may be motivated to stall and provide those successes after then have a majority and can boast for being responsible for the results.
At stake are a lot of important tax issues. These include permitting a charitable contribution directly from an IRA without recognizing income (or a deduction). There are also the tax changes from 2001 and 2003, enacted to help restore our economy after September 11, 2001 and other economic problems of the day. Do we still (or again) need support for our economy?
Also on the list (we hope!) is the dreaded AMT. Currently about 27 million families are destined for that. Typically Congress does a 1-year patch to reduce that to about 4 million. Certainly there are 23 million families counting on this action again?
It will be interesting to watch. Then we'll need new tax forms or instructions, and all of that will not start until January. To all those wanting to jump on their tax return in early January we can only say: "You want it when?!"
