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What a Democratic Congress Could Mean for Businesses in 2021 and Beyond

  • Democratic control of Congress has generally led to expectations of more business regulations and a higher corporate business tax rate
  • Narrow majority also boosts chances for further stimulus, infrastructure improvements, and more
  • Some changes may be delayed until after the COVID-19 pandemic is brought under control

With recent victories in a pair of runoff Senate elections in Georgia, Democrats have cemented a narrow majority in Congress – and businesses are preparing for potential changes and opportunities.

The Democratic Party retained control of the House of Representatives in the 2020 election, albeit with a diminished majority. After Democratic candidates Jon Ossoff and Rapahel Warnock won their Senate races, the Senate will be split 50-50 with incoming Vice President Kamala Harris breaking any tie votes. The shift in Congress also provides more momentum for the agenda of Joe Biden, who is set to take office on Jan. 20.

The wins in Congress also allow Democrats to control committees and usher through Biden’s picks for Cabinet officials, but the party’s narrow majority may also stymie more ambitious legislation since current Senate rules require 60 votes for a bill to pass. This situation is also more likely to give centrist Democrats more power in crafting proposals that could secure the support of moderate Republicans as well as more progressive members of their own party.

These are some policies that stand a greater chance of succeeding now that Congress and the White House are in Democratic hands:

Corporate tax increase

Biden is seeking to hike the corporate tax rate from 21 percent, where it was lowered following the Tax Cuts and Jobs Act of 2017, to 28 percent. He has also called for higher taxes on individuals earning more than $400,000 a year, which could impact business owners whose companies use a pass-through tax structure such as a limited liability company or S corporation.

There have been some predictions that congressional Democrats will seek a milder corporate tax rate increase, such as setting it at 25 percent, in order to win more Republican support. With signs of a slowing economic recovery, tax policy may also be put on the back burner until COVID-19 vaccines are more widely distributed and economic growth begins to pick back up.

More stimulus

Democrats and Republicans were at loggerheads for much of the latter half of 2020 over the size and scope of an economic stimulus bill, with Democrats seeking measures of approximately $2 trillion and Republicans uniting around a $500 billion proposal. Biden has characterized a $900 billion compromise passed at the end of the year as a “down payment” and promised more stimulus once he takes office.

Further stimulus could include additional aid for small businesses, more direct payments, and funding for state and local governments.

Investment shift

The prospect of a divided Congress proved palatable to Wall Street, which anticipated that this arrangement would preserve the status quo and offer little opportunity for major legislative changes. The results in Georgia prompted investors to bank more on small companies and others likely to benefit from further stimulus or the priorities of a Biden administration.


Further regulations are likely to emerge, particularly in areas such as oil and finance. Democrats are also expected to put greater scrutiny on tech companies, pursue lending and health care reforms, and prioritize consumer protections.


Biden has proposed plans for a major overhaul of the nation’s infrastructure, including a goal to make the energy sector carbon-free by 2035. Democrats are also likely to pursue Biden’s ideas to grow manufacturing in the United States, including a 10 percent tax credit on any activities that encourage onshoring.

Minimum wage

The federal minimum wage has remained at $7.25 an hour since 2009, and Democrats are likely to pursue an incremental increase to $15 an hour. Labor interests have rallied around this benchmark, and many states and cities have already established plans to increase their minimum wage to this level. In Connecticut, the minimum wage is set to rise to $15 an hour on June 1, 2023.

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