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This week (November 2-6)

Election Day is November 3.

On Friday, November 6 (at 12:00 p.m. ET), is the EY Webcast, "Tax in the time of COVID-19: Post election outlook." The coronavirus (COVID-19) and the resulting economic crisis — all occurring in an election year — have made reacting to tax and trade developments more complicated and more difficult. After election day, what might be on the horizon for tax policy, tax legislation and any further economic stimulus? Panelists will provide updates on: (i) elections, US economy and tax policy; (ii) breaking developments; and (iii) what's happening at the IRS. Register for this Thought Center Webcast.

Last week (October 26-30)

Campaign tax plans: Major questions if Democratic presidential nominee and former VP Joe Biden wins the presidential election include: whether stimulus legislation will be the first bill taken up, when, what it will include, and how it will get done; and when and how Biden would seek to increase the statutory corporate income tax rate to 28% and act on other tax increase proposals discussed in his campaign documents, especially given his September comments that a corporate rate increase would be a 'day one' agenda item to provide revenue for spending priorities. Asked during an October 29 news conference about Biden's intention to increase corporate taxes early on in a potential presidency, House Speaker Nancy Pelosi (D-CA) said she would wait to let Biden set the agenda, but: "I always have thought that when we do major tax policy, we should try to do it in as most bipartisan way possible, contrary to the dark of night, speed of light passage of a bill that gave 83% of the benefits to the top one percent in our country, and then they reinforce that in the CARES Act in the dark of night as well. So, it's not a question of having that discussion here. I think there's a large - quite an agreement that we should have brought down the corporate rate, but we should not have given away the store at the expense of America's working families."

There has been some disparity in analyses of Biden and Trump tax plans given the greater level of detail on tax policy coming from Biden's campaign as compared to the Trump Administration, and the recognition that one of the President's signature first-term achievements was the Tax Cuts & Jobs Act (TCJA). He has called for a drop in the corporate rate to 20%; a drop in the capital gains rate to 15%; and unspecified middle-class tax relief. White House economic adviser Larry Kudlow said on Fox Business October 26 that "we are deep into discussions about possible second term details for tax cuts and regulations," but "I don't see any reason why we have to put out a detailed plan." He said the President's "tax and regulatory cuts went to the middle income and lower income people … That will continue because he is going to stay on this pro-growth track." A Tax Policy Center post co-authored by former Obama-era Assistant Treasury Secretary for Tax Policy Mark Mazur said while the Trump campaign has not released a detailed tax plan nor provided sufficient information to estimate the effects of its proposals, the FY2021 budget proposal to permanently extend the Tax Cuts and Jobs Act's (TCJA) individual income and estate tax provisions scheduled to expire at the end of 2025 would reduce federal revenues by about $1.1 trillion from 2021 through 2030.

Coronavirus relief: The focus has turned toward whether it will be possible to clinch a deal on coronavirus relief and stimulus legislation following the election, in a lame duck Congressional session, or at the start of 2021. President Trump said October 27, "After the election we'll get the best stimulus package you've ever seen." On the Hugh Hewitt show October 30, Senate Majority Leader Mitch McConnell (R- KY) said, "We probably need to do another package, certainly more modest than the $3 trillion Nancy Pelosi package. I think that'll be something we'll need to do right at the beginning of the year." Bloomberg Tax reported that "months of stalled talks have left those tracking relief efforts cynical about the prospects that a large agreement can happen in most lame-duck scenarios" and "pessimism now abounds for the prospect that a stimulus deal will happen before the end of the year."

Speaker Pelosi signaled some optimism for a lame-duck session deal, saying October 29 on Bloomberg TV of whether it's possible, "Well I think so." Asked during her news conference about the prospect for a smaller deal after the election in a lame duck session if Biden wins, she said she wants a deal both for the American people and to clear the decks for a Democratic agenda to move next year. "We want to have as clean a slate as possible going into January," the Speaker said. She and Treasury Secretary Steven Mnuchin traded blame for the pre-election impasse, and the Speaker continued to cite the expansion of low-income tax credits as a sticking point. She said on MSNBC October 26, "we cannot sell our souls, and just say, 'OK, well, let's just do it whatever way they want to do it. We will do it again.' No, we have got to crush the virus. We have got to have our children safely in schools. We have got to insist that, as people are going into poverty, we are asking … them for Earned Income Tax Credit, child tax credit, all these things that take people out of poverty. They're insisting on keeping their big tax cut, $150 billion, for the wealthiest people in the country." That is presumed to refer to CARES Act NOL and excess business loss provisions.

US Blocks Consensus WTO Director General Pick: World Trade Organization (WTO) leaders this week announced that Nigeria's Ngozi Okonjo-Iweala had the most support among WTO members to become the next Director General. Okonjo-Iweala would be the first woman and the first African to lead the trade organization. The United States, however, blocked the appointment by throwing its support behind Yoo Myung-hee, South Korea's candidate. Traditionally the Director General is picked by WTO member nations on a consensus basis. The WTO had been working to select the new WTO leader at the November 9th General Council meeting. The U.S. opposition to Okonjo-Iweala, however, makes that target much less likely and risks further hobbling the trade organization, which has seen its Appellate Body sidelined due to the U.S. blockade of new trade judges.

Regulations watch: Under review by the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA): a final rule, "Like-Kind Exchanges and Tax Reform [TCJA];" a final rule, "Exception From Passive Income Under Section 1297 for Certain Foreign Insurance Companies [TCJA];" and a proposed rule, "Exception to Passive Income Characterization of Certain Insurance Companies With Respect to Passive Foreign Investment Companies [TCJA]."

Below is a timeline for guidance projects released by the IRS related to the TCJA.

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