How Might a Sweep Affect Taxes and the Farm Bill
The Markets are now assuming that the Republicans will sweep the elections this fall. How might that affect the Farm Bill and Taxes
The 10-Year bond dropped a full 200 basis points yesterday on the assumption that the Republicans will sweep the elections this fall. The bond market assumes if this happens that the “Trump” tax cuts will likely be made permanent, and spending will increase which will then increase the deficit.
Now, it is too early to know if this will happen, but here is some of our assumptions on how it may affect the Farm Bill and taxes if a sweep does occur.
First, on the Farm Bill. Does this make Senator Stabenow come to the table now to get the Farm Bill done before year-end while she is still the leader of the Senate Ag Committee. Or does this enable the Republicans to stonewall the Farm Bill since they know after the elections they will be in full control.
The bottom line is if they are in control of the process, the final Farm Bill will likely look very similar to the current House Ag Committee proposal plus perhaps some of the extra benefits that Senator Boozman has proposed.
We shall see.
On the tax side, it is likely that most of the TCJA tax cuts would either be made permanent or extended. However, there may be some offsets such as an increase in the corporate tax rate up to 25% or so.
Many of the conservatives in the House would like to have the tax cuts be offset with revenue, but likely they don’t have enough power to offset the others who want cuts since their assumption is that it will increase the economy enough to offset the cuts.
We shall see.
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It will be an interesting time over the next four months. We will keep you posted.