Media Coverage
Source: Law360
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Olivia Thomas
11.12.20
It’s unlikely President-elect Joe Biden's administration will enact dramatic changes to the tax code, including raising the rate for corporate income and capital gains, given Congress' likely makeup in the upcoming congressional session, Law360 reported.
During the ABA’s online Philadelphia Tax Conference, Julie Divola a Pillsbury partner and leader of the firm’s San Francisco Tax practice, said given that control of the Senate will hinge on two runoff elections in Georgia and that Democrats lost seats in the House of Representatives, Biden is likely to temper some of the more ambitious proposals he outlined during his campaign.
"Anything that would pass, even with the House not having a big margin, would have to be somewhat moderated," she said. "And in the Senate, unless the Democrats win both [Georgia] seats, we will have a Senate Republican majority in the Senate, which means that it will be very hard."
During his campaign, Biden pledged to increase the corporate rate from 21% to 28%, partly reversing the extent to which Republicans lowered the rate when they passed the Tax Cuts and Jobs Act in 2017. Biden also rolled out a proposal to raise the capital gains rate from 23.8% to 39.6% for those earning more than $1 million.
Even though it's unlikely Biden will be able to entirely make good on either pledge, given Congress' potential makeup, that hasn't slowed a year-end flurry of transactions that high-net-worth individuals with S corporations are initiating, Divola said.
"There's a lot of people trying very desperately to get deals done before the end of the year," she said. "Once people start on that trajectory, absent some real hurdles, which there are in some deals, they seem to be continuing on in that trajectory."
The trend is likely to continue, she added.