Energy, taxes and regulation are likely to dominate
The best window for the Biden administration to get its policies enacted is the next two years, as midterm elections traditionally give the opposition party a boost and launch the next presidential election cycle, making it more difficult to move legislative agendas forward. Here are some issues we’re expecting the new administration to move on that may be of special interest to Texas businesses:
Energy – President Biden has already stopped further development of the Keystone Pipeline, paused new oil and gas leases on federal land, rejoined the Paris Agreement on climate, and reinstated certain environmental regulations roll-backed by the previous administration. The watchword for Biden energy policy is clean. The Biden administration is expected to incorporate clean energy initiatives into any infrastructure program proposals.
The recent blackouts in Texas have already prompted some to cast blame on wind and solar power delivery for failing in the freezing temperatures. However, in fairness, all forms of energy generation were compromised due to the record-shattering cold. Despite that controversy, there is still a lot of interest nationally in renewable energy, as well as natural gas, which has prompted merger and acquisition activity in the sector. Texas energy companies, especially start-ups and young ventures, should have a strategic plan in place to guide their growth or to make them more attractive to a potential buyer.
Taxes – Two commonly expected tax change proposals are increases in corporate tax rates and increases in capital gains tax rates, in part to reap some of the profit made in the exuberant stock market. Biden has also floated the possibility of a higher personal income tax rate on the highest income brackets. Businesses and their owners are wise to have an updated tax strategy in play and be strategic about the timing of anticipated liquidity events and investments.
Regulation – The new administration is expected to increase regulatory oversight in many industries, especially those related to the environment. Businesses should watch for proposals that advocate for a principles-based approach to regulations, rather than rules-based policies. The principles-based formula sets intentions for the regulations to achieve. Many business leaders advocate for this philosophy as it is easier for corporations to comply, and thus achieve the regulation’s goals, rather than the rules-based formula that sets a one-size-fits-all parameter which can be inappropriate for many situations within an industry.
Those are only three issues affecting business under the Biden administration as we look forward over the coming years. Trade with China and regulation of big tech are two others that could affect all of our daily lives. Expect more to come, especially as the economy recovers from the Covid-19 pandemic.
As always, Wright Connatser is here to help your business with its legal needs.