While the 24-hour news cycle may be zoned in on the mud-slinging between presidential candidates Kamala Harris and Donald Trump, the race to control Congress is lurking as a potential game-changer for advisors and their clients, according to Michael Townsend, head of legislative and regulatory affairs at Charles Schwab.

Trump, who signed the Tax Cuts and Jobs Act of 2017 while president, has repeatedly asserted he wants to make the tax reform bill  permanent—including increasing the standard deduction, lowering corporate and estate tax rates and increasing the child tax credit.

Meanwhile  Democrats have said they will let the tax cuts expire at the end of 2025. Harris has not put forth any economic policy positions since lauching her campaign more than 20 days ago. But she voted against the 2017 tax cuts as a senator and campaigned in 2022 to raise the top marginal income tax rate for the top 1% of earners to 39.6%. As vice president, Harris has supported President Joe Biden’s promise to not increase taxes on households making under $400,000. But she could likely champion an increase in top income tax rates on wealthier investors, Townsend said in an online "Market Talk" presentation.

The candidate who wins the White House can produce all the policy positions he or she wants, but Congress is where the “absolute gigantic policy debates” will happen next year, Townsend said. The higher standard incoming tax deduction, higher business taxes and the estate tax exemption, which could be cut by half, hang in the balance, Townsend told advisors.

“You may have a very different discussion if Republicans can win the House and Senate, than if we have a split congress," Townsend said.

With less than 100 days left to election day, how are the battles for control of the Senate and the House shaping up?

In the Senate, Democrats (including the four Independents who caucus with the Democrats) have a 51-49 majority. But there are 23 Democrat-held seats up for re-election in November, and just 11 Republican-held seats, giving Republicans a significant advantage as they need to flip just two seats to capture the majority, Townsend said.

One seat is already virtually assured of flipping. In West Virginia, moderate Democrat Senator Joe Manchin, who became an independent earlier this year, is not running for re-election. The Republican governor of West Virginia, Jim Justice, is an overwhelming favorite to win the Senate seat in one of the reddest states in the country.

Senator Sherrod Brown (D-Ohio) and Senator Jon Tester (D-Mont.) are the only two Democrats who represent red states, and both are running for re-election this November in highly competitive races.

The “Cook Political Report” rates four Senate seats as virtual toss-ups—Ohio, Montana, Michigan and Nevada. No Republican-held seats are considered to be in significant danger of flipping, Townsend said.

“We consider Republicans to be the favorites to capture control of the Senate. But it could be a different story in the House of Representatives,” Townsend warned.

In the House, Republicans hold a narrow 220-212 advantage, with three vacancies. But Democrats have a shot at recapturing control, Townsend said.

Renewed energy among Democratic voters since Harris's entry in the presidential race could help Democratic candidates pick up valuable Republican-held House seats in California, New York and elsewhere, he said. “It's far from a slam dunk, however, that Democrats will win enough seats to secure a majority. Expect the battle for the House to be extremely close,” he said.

Others have noted that it would only take a handful of Republican seats to change hands in those two traditionally Democratic states to turn the House blue. “If Republicans win the Senate and Democrats flip the House, it would be an historical first—the House and Senate have never flipped in opposite directions in the same election,” Townsend said.

If either party were to sweep the White House, House and Senate this November, that party will be in the driver’s seat on expiring tax cuts and beyond, he said. In contrast, a divided government will produce a complicated and unpredictable debate on taxes next year, Townsend warned.