What Effect Would a Democratic Win Have?

With the November 7 midterm elections close at hand, many political analysts in Washington are predicting that the Democrats will indeed win back the 15 seats needed to take control of the House of Representatives. Republicans worry they will lose 23 to 27 seats in the House and they will also lose the Senate unless Sen. George Allen can pull out a win in Virginia.

Washington Analysis, an economic, political, and regulatory research firm in D.C., says that in the Senate, Democrats “are only a slight underdog to pick up the six seats needed to wrestle control from the GOP.” Indeed, a Democratic takeover of the House or Senate or both would result in “considerable changes to the legislative environment for investors,” the research firm says.

Under a Democratic Congress, life insurance companies would benefit as the estate tax would be less likely to be repealed, but changes to Sarbanes-Oxley would be harder to come by, Washington Analysis predicts. Democrats oppose exempting companies from SOX. Also, extending the 15% capital gains and dividend tax rates again would be an “arduous” task under Democrats. As for the Alternative Minimum Tax (AMT), there is little chance that changes will be made to the AMT under either a Democratic or Republican Congress. Stopgap measures to raise exemptions so that fewer middle-class taxpayers are hit by AMT is a more likely outcome under both parties, Washington Analysis says.