President-elect Joe Biden campaigned on raising taxes on corporations and the richest Americans — but Republicans could stand in his way if they win one of the Georgia runoffs and maintain control of the Senate.
“We're going to have to wait and see what that process will mean,” said Neal. “Timing on these sorts of considerations in an economic downturn, seeking new revenue, that would be a bit of a challenge.”
Neal and Biden both argue the GOP tax cuts went too far for the highest earners and corporations, but Republicans don’t have any desire to roll back their 2017 law.
“It was very much directed toward relief for people who didn't need it, and who in fact weren’t asking for it,” said Neal.
Still, the Chairman is hoping for compromise next year — even on taxes.
“It’s going to call for, obviously, I think some creative thinking. Despite what our Republican friends point out, revenue as a percent of gross domestic product is considerably lower than the norms,” said Neal. “But I also think if you're President Biden, you're probably going to be very careful about how you approach revenue issues.”
Neal said a divided Congress may be able to expand the child tax credit and earned income tax credit, and find ways to help women at work.
“I think we've learned a pretty painful lesson here in the pandemic about women who had to leave the workforce to take care of children. How difficult it is for them to try to get back into the workforce,” Neal said. (According to a report by the National Bureau of Economic Research, this pandemic-induced recession has increased the gender wage gap by 5%, compared to regular recessions, which tend to reduce the gender wage gap by around 2%.)
As always, there is also hope for a bipartisan agreement on infrastructure during the Biden administration. Both Republicans and Democrats have long said an infrastructure package is necessary, but have yet to agree on ways to move forward. Neal told Yahoo Finance the timing could be right.
“Interest rates right now are at record lows. It's a bad time for savers, but a good time for borrowers,” said Neal.
Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.