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October 2024 Policy Pulse

Oct. 2, 2024 · Authored by

All eyes are on the election, the outcome of which will likely determine the future of tax policy. The stakes are exceptionally high as the United States is facing its largest tax cliff in decades. With that in mind, Baker Tilly has created a series of webpages providing details and insights on the 2024 election and what it could mean for taxpayers:

• Tax policy and the 2024 election provides an overview of the election’s impact on tax policy, discusses 2025 expectations, and gives taxpayers steps to take to ensure they are in the best position possible to adapt to future changes.
• Tax Cuts and Jobs Act and its impact outlines the history of the Tax Cuts and Jobs Act (TCJA), details the noteworthy expiring provisions, and explores the cost of extension.
• Election details and possible outcomes considers the White House and Congressional elections, discusses how each affects the legislative process, and details the impact of possible election outcomes.
• Comparing tax policy platforms provides broader party tax policy platforms as well as presidential tax proposals.

The balance of power heading into the 119th Congress will affect any potential tax reform, which will have financial implications for almost all U.S. taxpayers. Baker Tilly will continue to provide insights through the election and ultimate legislative resolution.

Government funding

As expected, Congress wasn’t able to pass any of the 12 appropriations bills needed to fund the federal government before the beginning of the 2025 fiscal year (FY25), which began on Oct. 1, 2024. After contentious debate about a six-month continuing resolution (CR), lawmakers ultimately passed a “clean” three-month CR that will keep the government funded at FY24 levels through Dec. 20, 2024. This marks the 28th year in a row that Congress has used a CR to avoid a government shutdown.

Congress won’t convene again until Nov. 12, after the general election, for a lame duck session. Lawmakers will face two must-pass legislations – FY25 government funding and the annual defense bill (the National Defense Authorization Act or NDAA).

Republicans and Democrats differ vastly on FY25 topline spending figures. Most democrats support adhering to the funding levels agreed to in the Fiscal Responsibility Act of 2023, negotiated by President Biden and then-House Speaker Kevin McCarthy (R-CA). Meanwhile, some more conservative Republicans believe non-defense spending should be significantly lower. Current Speaker Mike Johnson (R-LA) is also adamant Congress will not approve a December omnibus, a single bill that combines all twelve appropriations bills, which could complicate negotiations and result in another CR that extends funding into the next Congress.

Lawmakers will also have the opportunity to pass a year-end tax extenders bill in the lame duck session, though the prevailing sentiment is that a tax legislation is unlikely. The most pressing issues include the trio of business tax provisions that were included in the bipartisan tax bill that recently failed to advance in the Senate.

Stay Tuned! We’ll bring you post-election insights as both parties determine their lame duck priorities.

Federal debt ceiling

Congress will also need to address the federal debt ceiling in the lame duck session. The federal debt ceiling is “the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations.” The limitation doesn’t authorize new spending, as appropriations bills and continuing resolutions do, it simply allows the U.S. to incur debt on spending commitments authorized by other legislation. The federal debt limit is set by Congress.