Daily Tax Update - November 7, 2012: Election Results for Tax-Writing Committees

ELECTION RESULTS FOR TAX-WRITING COMMITTEES:  In yesterday’s election, President Obama won a second term, Democrats kept control of the Senate, and Republicans maintained a majority in the House.  Democrats picked up Senate seats in Massachusetts and Indiana.   Two independents will hold seats in the Senate, with the re-election of Vermont Sen. Bernard Sanders and the election of Angus King from Maine. King is expected to caucus with the Senate Democrats. Republicans kept control of the House with at least 232 seats.

  • Yesterday’s election will result in little turnover on the House Ways and Means and Senate Finance Committees.  However, longtime California House Ways and Means Democrat Pete Start was defeated, while Oversight Subcommittee Chairman Charles Boustany, Jr. (R-LA) will be in a runoff in December. Three Ways and Means members are retiring, including Rep. Wally Herger (R-CA) and Reps. Rick Berg (R-ND).  Shelley Berkley (D-NV) ran for the Senate and was defeated in yesterday’s election. The committee also has an unfilled seat from the July resignation of former Rep. Geoff Davis (R-KY).
  • Senate Finance Member Sen. Orrin Hatch (R-UT) retained his seat, as did Democrats Maria Cantwell of Washington, Ben Cardin of Maryland, Thomas Carper of Delaware, Robert Menendez of New Jersey, Bill Nelson of Florida, and Debbie Stabenow of Michigan.  The Finance Committee has four open seats with the retirements of Sens. Jeff Bingaman (D-NM), Kent Conrad (D-ND), Jon Kyl (R-AZ), and Olympia Snowe (R-ME).
  • The committee ratios and new Committee members are usually announced in the lame-duck session or in the first few weeks of the new Congress. The composition of the Finance Committee may be 13 Democrats and 10 Republicans.  Republican Senators that have expressed an interest in serving on the Finance Committee include Sens. Johnny Isakson (R-GA), Rob Portman (R-OH) and Jim DeMint (R-SC).  Democratic possibilities include Sens. Robert Casey (D-PA), Michael Bennet (D-CO), and Mark Warner (D-VA).

BOEHNER SUGGESTS DOOR OPEN TO NEW REVENUE TO AVOID “FISCAL CLIFF”:  In remarks today on averting the president’s “fiscal cliff,” House Speaker John Boehner cited the bipartisan Tax Reform Act of 1986 as a model for how Republicans and Democrats can work together to pave the way for long-term economic growth, help bring jobs home, and rein in our national debt.  Boehner said, “There is an alternative to going over the fiscal cliff, in whole or in part.  It involves making real changes to the financial structure of entitlement programs, and reforming our tax code to curb special-interest loopholes and deductions.  By working together and creating a fairer, simpler, cleaner tax code, we can give our country a stronger, healthier economy.  A stronger economy means more revenue, which is what the president seeks. . . . There’s a model for tax reform that supports economic growth.  It happened in 1986, with a Democratic House run by Tip O’Neill, and a Republican president named Ronald Reagan.”  More federal revenue “is what the president seeks,” said Boehner. “Because the American people expect us to find common ground, we are willing to accept some additional revenues, via tax reform.”  Boehner added, “Not higher tax rates, and not tax hikes on small business job creators, but tax reform that helps grow our economy – which will lead to more revenue.”  Boehner noted that “reforming our tax code to eliminate special-interest loopholes and deductions” alone won’t get the job done.  Boehner said, “In order to garner Republican support for new revenues, the president must be willing to reduce spending and shore up the entitlement programs that are the primary drivers of our debt.”

  • Today, Senate Majority Leader Harry Reid called for a quick solution to ending the “fiscal cliff.”  Reid said that he’s “not for kicking the can down the road” and that any solution should include higher taxes on “the richest of the rich.”  Reid added, “The vast majority of the American people — rich, poor, everybody agrees — the richest of the rich have to help a little bit.”

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE: 
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

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