Welcome to the Tax the Rich series, where I explain tax policy in plain English because the people writing the laws are counting on you to ignore them.
Last month I broke down the “One Big Beautiful Bill.” It, not so shockingly, gives tax cuts that skew toward the top, paid for partly by cutting Medicaid. Previous emails are linked on the blog if you want to catch up.
Now for the news.
Democrats won both the House and the Senate on November 3, by the biggest margins either party has seen in almost 20 years. The term “bluekkake” (as seen around the internet) has really been resonating with me. You may see others using less graphic terms like “blue wave” and “blue tsunami.”
Regardless, does it actually do anything for your tax bill? Mostly no, and here’s why.
The Veto Problem
Democrats take over January 3, 2027, but Trump is still president until January 2029. Any tax bill needs his signature, or two-thirds of both chambers to override a veto, and Democrats don’t have that. Accounting firm Plante Moran expects current tax law to stay largely untouched through 2028.
What Democrats Will Try Anyway
The Tax Foundation, a right-leaning think tank, lays out the likely agenda:
Bring back the bigger ACA premium subsidies that expired at the end of 2025
Expand the Child Tax Credit, possibly from $2,200 to $3,000 or more per child
Expand the Earned Income Tax Credit (EITC) for workers without kids (the max is $664 now, and was $1,502 in 2021)
Raise the 21% corporate rate
Add surtaxes on millionaires and tax capital gains more heavily
Expect them to pass the House and then die at the White House. They’re still fun to watch because they’re a preview of what the party will campaign on in 2028. Proposing them makes it easy for Democrats to say “Republicans said no to X, Y, and Z,” which could be powerful messaging while costs are up across the board.
The Plot Twist: California Said No
In the same election that handed Democrats Congress, California voters rejected Prop 40, the one-time 5% billionaire tax. Roughly 53% voted no, per AP’s projection. Opponents raised over $333 million to fight it. Newsom opposed it too, arguing that taxing billionaires should happen nationally, not state by state. Supporters say the proposal will be back on the ballot in 2028.
Support for taxing the ultra-wealthy and winning at the ballot box are two different things. This is a topic I think would be fun to explore more in depth in the future.
Tariffs: Congress Can’t Easily Fix This One
If you read the tariffs email, here’s an update. The temporary 10% global tariff expired on July 24, 2026, and it was replaced the same day with new Section 301 duties of 10–12.5% on 60 countries. The sector tariffs on things like steel and aluminum (up to 50%) are still in place. Congress would need a veto-proof law to end them, and the issue doesn’t split cleanly by party, as some Democrats back tariffs on specific goods.
What This Means for Your Business
Boring but useful: the rules you have now are probably the rules you’ll have through 2028. Plan around them.
The 20% pass-through deduction is permanent
The tips, overtime, auto loan interest, and senior deductions expire December 31, 2028 (expect them to be a big 2028 campaign topic)
States may move faster than Washington, and several considered millionaire’s taxes and property tax changes this year
What’s Next
Next month I’m digging into these so-called billionaire taxes: how they could work, and whether they’ll ever pass.
Best,
Braden
