The 2024 elections are nearly upon us, with the fate of the tax world hanging in the balance. Of course, other important issues loom as well, including open borders, crime, inflation, and conflicts in Europe and the Middle East, as well as the style and personality of the candidates themselves. But for tax nerds, these are eclipsed by the positions offered by the candidates on taxation.

The tax landscape is highly dependent on the fate of the election, according to Marc Gerson, a member at Miller & Chevalier and former majority counsel at the House Ways and Means Committee.

“Obviously the fate of the 2017 tax cuts is at stake,” he explained. “But also what happens during the lame duck session is critical. The focal point will be to extend the 2017 provisions which were enacted on a temporary basis. Some have expired, while others will expire at the end of 2025, so it’s safe to say that regardless of the election results, we will see some tax legislation next year. Neither party wants to see higher taxes on all Americans. What is to be determined is the length and scope of any extension and how it will be paid for.”

They also have to pass a budget, he observed: “And regardless of formal requirements, there will be incredible pressure on Congress and the White House to pay for legislation so there will be no increase in the deficit. Some Republicans assert that the tax cuts ‘paid for themselves,’ since revenue increased after enactment of the Tax Cuts and Jobs Act.”

“There are Republicans that take the position that the extension of the TCJA should not have to be paid for because under dynamic scoring they will lead to greater revenue,” Gerson observed. “But some Republicans prefer deficit reduction to tax relief, and some Democrats believe that tax cuts will add to an already overburdened deficit.”

Dynamic scoring assesses the effect of tax legislation not only in terms of its direct effect on the budget, but also the indirect effects of tax on economic growth. It projects a positive or negative effect on jobs, wages, investment, gross domestic product and revenue. 

The reconciliation process allows the passage of the budget without the impediment of a filibuster by the minority party. The post-election “lame duck” Congress will return to Washington November 12. 

“So much depends on the election. If either party has a sweep, they will try to do tax through reconciliation. Then the extreme policies of either party will get tempered down,” said Gerson. “The other thing to keep in mind is that Congress and the White House next year will have immediate ‘must pass’ legislation so they will have to deal with the deficit, government funding and tax law. They really have a full agenda of ‘must pass’ legislation from the beginning of the year. It will be very challenging right from the start.”

Perhaps foremost among that must-pass legislation will be some kind of solution for funding the government (the current arrangement ends December. 20).

“The productivity of the new Congress is dependent on the election results, which may result in a change in control of both the House and the Senate,” said Gerson. “This may result in the delay of any real consideration in the lame duck session. The new Congress will have to deal with the debt limit, government funding, a farm bill and the TCJA tax cuts. Meanwhile, the current continuing resolution expires December 20. There could be disaster-related legislation in the lame duck session, which could involve targeted disaster tax relief and may start the discussion of a 2024 tax bill. And they may pass either an omnibus appropriations bill if they can agree on it, or another continuing resolution bill into the new year.”

Global confidence among accountants and finance professionals globally declined moderately in the third quarter of this year and is now at its lowest level since Q4 2023, although confidence increased in North America, according to the quarterly Global Economic Conditions Survey from the Association of Chartered Certified Accountants and the Institute of Management Accountants.

The survey, released Tuesday, found CFOs’ confidence also declined globally amid a sharp deterioration in their assessment of new orders. Even though confidence improved in North America, it recovered less than half of its previous decline. In contrast, there was a significant decrease in confidence in the Asia Pacific region. Concerns about the continued weakness of the Chinese economy probably weighed on sentiment, with the survey being completed before the authorities announced a pivot to a more aggressive policy stimulus. Confidence also fell significantly in Western Europe, driven by a decline in U.K. confidence, amid concerns about tax hikes in the upcoming budget.

The survey also asked accountants to rank their top three risk priorities and for the second consecutive quarter, regulatory change ranked at the top for respondents in financial services, while the economy remained in first place for those in the corporate sector. Both public sector entities and small and medium-sized practices cited cybersecurity as their largest concern. But for the first time, climate change claimed a spot in the top three, with the public sector placing it third. Another first-ever was by region, with Western Europe ranking talent scarcity and retention first.

“The global economy has been quite resilient so far in 2024, but the latest survey of accountants points to some easing in growth at the current juncture,” said ACCA chief economist Jonathan Ashworth in a statement. 

The proportion of respondents reporting increased operating costs remains elevated by historical standards in most parts of the world, although the share of global respondents reporting problems accessing finance moved lower again amid policy easing by central banks. 

“While the increase in confidence in North America is welcome, the key indicators are consistent with some slowing in the U.S. economy and significant caution on behalf of businesses,” said 

Alain Mulder, senior director of Europe operations and global special projects at the IMA, in a statement. “But with the job market showing resilience and the Federal Reserve beginning its rate-cutting cycle, the most likely scenario for the U.S. economy still looks to be a soft landing. 

In North America, confidence improved somewhat in Q3, but recovered less than half of Q2’s decline, and remained below its historical average. The New Orders, Capital Expenditure and Employment indices all declined in different degrees and are well below their historical averages. The proportion of respondents reporting increased operating costs eased to its lowest since Q1 2021, while remaining high by historical standards. 

“All in all, while the increase in confidence is welcome, the key indicators are consistent with some slowing in the U.S. economy and significant caution on behalf of businesses,” said the report. “But with the job market showing resilience and the Federal Reserve beginning its rate-cutting cycle, the most likely scenario for the U.S. economy still looks to be a soft landing. Nevertheless, given the uncertainty faced by firms amid the election, and sharply heightened geopolitical tensions, one cannot rule out a sharper-than-expected slowdown.”

Thomson Reuters has expanded its AI capacities even further with the recent acquisition of Materia, a company which specializes in the technology for tax and accounting purposes. 

Materia’s platform can answer accounting queries in plain language and embed citations so users can verify the information. It also functions as a document workspace, complete with analysis templates that can be saved and shared with a team, allowing for standardized work, as well as automatically generated insights. The platform can also be loaded with the firm’s own guidance and policies, client documents and contracts, and engagement files, as well as create templates based on the firm’s own checklists. There is also a dedicated search engine for authoritative sources like the SEC, IRS and FASB, which also includes documents and integrations within the library. Finally, the platform features an accounting engine that can handle large-scale accounting workflows, from running templates to multi-stage planning.

“Our vision is to provide each professional we serve with a Gen AI assistant. Materia will further accelerate this vision for our tax, audit and accounting customers,” said David Wong, Chief Product Officer, Thomson Reuters. “Once fully integrated, Materia will transform work and unify the entire customer experience with applications across our tax, audit, and accounting portfolio. We are excited by the potential of combining Materia with Thomson Reuters content, know-how, and solutions.”

Thomson Reuters Ventures, an early investor in Materia, led the effort to launch a proof-of-concept initiative that allowed select Checkpoint Edge users to engage with certain Checkpoint content through Materia’s AI assistant.  The promising initial results from this work provides confidence that Thomson Reuters and Materia together can best leverage generative AI to deliver value for Thomson Reuters tax, audit and accounting customers.

This is but the latest AI-related move by Thomson Reuters. Most recently, it released a new auditing solution that uses AI to segment audit testing populations, identify anomalies within the set, and generate all required documentation; called Audit Intelligence Analyze, it is the first in what is promised to be a whole suite of software solutions for auditors called Audit Intelligence. Just a little bit before that, it released Checkpoint Edge with an AI-assisted research feature. 

These moves are part of a larger pivot from the business solutions company towards AI. Around springtime this year, it announced  its first brand refresh in 16 years to emphasize its commitment to investing in products and technology that leverage generative AI. The rebranding — with a new promise and messaging, evolved tone of voice, a new color palette, a simplified logo and modernized fonts — is meant to position the company squarely as a technology company.