Accounting
The $10B battle for Congress: Races to watch
The battle for control of Congress has topped $10 billion as the two parties vie for outsized influence over taxes, spending and the implementation of the next president’s agenda.
It’s a staggering and potentially historic sum, based on OpenSecrets data, considering that only about a 10th of congressional races are actually competitive. Yet, it outpaces spending on the hard-fought presidential election.
The whopping figure reflects the colossal stakes. Control of Congress is pivotal to economic policy. The expiration next year of the 2017 tax law puts trillions of dollars in tax provisions in play. The Senate can block the appointment of key financial-industry regulators. Legislative battles are shaping up over prescription drug prices and regulation of the crypto industry, energy, artificial intelligence and social media.
Oliver Contreras/Bloomberg
Republicans are currently favored to gain the Senate majority based on a favorable map, while minority Democrats have at least an even chance to take control of the House, potentially reversing both chambers and continuing a divided government. Many races remain tight and the outcome may not be known for days after the Nov. 5 election.
Here are some key races to watch:
The Senate: Montana
Democrats’ hopes in the Senate largely hinge on Montana, where three-term incumbent Jon Tester has trailed Republican Tim Sheehy, a political newcomer, businessman and former Navy Seal. That race is set to break records with about $250 expected to be spent per resident of the sparsely populated state on advertising alone, according to AdImpact data.
Tester, a third-generation farmer, has long relied on his folksy charm and a reputation for delivering resources to his state to overcome its Republican tilt. This year, Democrats hope Tester’s support for abortion rights will help him and other vulnerable candidates hold on.
But former President Donald Trump is expected to win in Montana by double digits, so Tester will need many Montanans to split their ticket between the parties, a practice that has become less common as the electorate has become more polarized.
Ohio
Even if Tester pulls out a win, Democrats would likely need to win every other tossup race, including Ohio, where Sherrod Brown is trying to defend his seat against car dealer Bernie Moreno. Advertising alone has cost more than $530 million in that race, according to AdImpact.
As in Montana, Trump is expected to win Ohio easily, which could give Moreno a boost despite Brown’s popularity with many White working-class voters who form the former president’s base.
Democrats also need to keep seats in the presidential “Blue Wall” battlegrounds of Pennsylvania, Wisconsin and Michigan — all states where races have tightened — as well as in Arizona and Nevada, where the party’s Senate candidates have held larger leads in polls.
Wild cards
If Tester loses, Democrats would need an upset win somewhere else. That would likely require Colin Allred to defeat Senator Ted Cruz in Texas or Debbie Mucarsel-Powell to beat Senator Rick Scott in Florida. A wild card race in Nebraska, where independent union leader Dan Osborn has been running neck-and-neck with incumbent Republican Deb Fischer, could also scramble the outcome on election night.
Democrats’ best-case scenario is likely a 50-50 Senate, with control of the chamber depending on the outcome of the presidential race, because the vice president breaks ties.
Republicans, however, could win as many as 55 seats if they sweep the tossup races. A larger majority would widen the aperture for GOP tax cuts and other legislation if they control both chambers of Congress and the White House. In 2017, the party’s thin majority led to the defeat of efforts to repeal the Affordable Care Act via a thumb down from then-Senator John McCain.
The GOP has hoped that popular former Governor Larry Hogan would pull off an against-the-grain win in heavily Democratic Maryland, but Prince George’s County Executive Angela Alsobrooks has had double-digit leads in recent polls despite significant super political action committee spending on Hogan’s behalf, including $10 million from billionaire Ken Griffin.
The House: New York and California
Democrats’ chances are significantly better in the House, where Republicans now hold only a slim majority and must defend many areas won by President Joe Biden in 2020, including in heavily Democratic states like New York and California. The party needs a net gain of just four seats to hand the speaker’s gavel to Hakeem Jeffries of New York, and with it the power over the federal purse and House investigative subpoenas.
In addition to 10 New York and California seats in play, Democrats have targeted Heartland districts in Nebraska and Iowa now held by Republicans, as well as battlegrounds in New Jersey and Arizona.A Des Moines Register poll published Sunday showed Democratic challengers in Iowa
Meanwhile, Speaker Mike Johnson of Louisiana — who unexpectedly ascended to the job late last year after the tumultuous ouster of his predecessor — is scrambling to save his gavel. He has aggressively stumped and raised money nationwide, including a string of events in key New York districts that helped the GOP flip the House two years ago.
Republicans have sought to capitalize on voter discontent on issues like inflation and immigration, targeting open-race seats of retiring Democrats in Michigan, and incumbents in states including New Mexico and Pennsylvania as well as those in districts won by Trump in 2020, like Jared Golden in Maine and Mary Peltola in Alaska.
The first results on election night could come from Virginia, where polls close at 7 p.m. New York time, with each party having a pickup opportunity. Republicans hope to take the central Virginia seat being vacated by Democrat Abigail Spanberger, who is running for governor next year, while Democrats try to defeat incumbent Republican Jen Kiggans in a coastal district.
The nonpartisan Cook Political Report rates 208 seats as leaning, likely or solidly Republican compared to 205 for the Democrats, with 22 tossup seats; 218 are needed to ensure a majority.
The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all
- H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
- H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
- H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
- H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.
“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”
The bills were also included in a recent Senate
The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter.
- H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
- H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS.
House Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.
“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”
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