Memo – 2026 Midterms Are Over – How May It Impact Individuals, Business Owners And Landlords?

With the 2026 midterms over, it seems that the country is moving further to the left.

What might this entail for everybody? 

Democrats won governor’s races in Alaska, Georgia, Iowa, Nevada, Ohio, and Texas.

I’m getting many calls and emails from concerned clients especially in these states. They asked me to detail what this change may mean.

I researched how Democrats have governed and wanted to detail some of the potential negatives that might be in store. These are worst case scenarios, not certainties.

1. 1. High Tax Burdens: Enacting high individual income, corporate, and capital gains taxes, which critics contend disincentivizes investment and prompts high earners and major employers to relocate to lower-tax jurisdictions.
      1. Wealth Tax
   2. Stringent Business Regulations: Imposing extensive labor mandates, environmental compliance requirements, and lengthy permitting cycles that increase operating costs for small businesses and delay industrial expansion.
      1. Legislation to outlaw subcontractors and make them W2 employees.
         1. See the battle Amazon is fighting in NYC regarding The Delivery Protection Act.
      2. Minimum wage increases.
   3. Progressive Criminal Justice Reforms: Implementing policies like: 
      1. Cash bail elimination
      2. Raised felony theft thresholds, and 
      3. Reduced sentencing guidelines, which opponents link to rising property crime, commercial theft, and urban instability.
      4. Reduced Police Presence.
   4. Sanctuary States.
      1. Less prosecutions of retail theft.
      2. Increased crime and vandalism
      3. Decrease in residential real estate values due to the negative impact of the above and sanctuary states/cities policies.
      4. Decrease in safety due to sanctuary states/cities policies.
      5. “Low Level” crimes being ignored.
      6. Selective response to 911 calls.
   5. Development Barriers and Housing Shortages: Applying rent control measures and complex environmental review statutes that slow down or block housing construction, driving up rents and home prices.
   6. Aggressive Energy Mandates: Enforcing aggressive carbon-reduction timelines and restrictions on fossil fuels before renewable alternatives reach cost parity, leading to higher electricity rates and fuel prices.
   7. Unfunded Public Pension Liabilities: Negotiating generous pension and retiree healthcare benefits for state workers without fully funding the long-term liabilities, creating budget shortfalls that divert tax dollars away from basic services.
   8. Resistance to Educational Choice: 
      1. Opposing charter school expansion
      2. Voucher programs, and 
      3. Education savings accounts, which critics argue traps students in underperforming public school systems.
   9. Net Domestic Out-Migration: Driving out-migration of middle-class families, retirees, and businesses to lower-cost states (“blue state flight”), which shrinks the local tax base and reduces congressional apportionment.
   10. Mismanaged Spending on Homelessness: Allocating large amounts of taxpayer funding toward homelessness and public health initiatives without strict performance metrics, while failing to clear public encampments or enforce open drug laws.
   11. Unrestrained Public Sector Growth: Expanding state agencies and ongoing budget obligations during revenue booms, leaving states vulnerable to fiscal shortfalls and emergency tax hikes during economic downturns
   12. Putting Undocumented Immigrants Ahead Of Citizens.
   13. DEI Where They Can Institute It.
   14. Reparations Legislation.
   15. Spending On Affordable Housing.
       1. See NYC’s Block By Block Plan.

Other Possible Impacts:

1. Business
   1. Closing of large retail chains: Walmart, Target, Walgreens
   2. Exodus of corporate headquarters.

1.  Individual
   1. Income tax and real estate Tax hikes for “wealthy” individuals.
      1. And wealth taxes
   2. Hate crimes being enforced in one direction.
   3. Homeless in-migration.
   4. Transgender in-migration.
   5. Undocumented in-migration.

1. Landlords
   1. Elimination of landlords is the goal.
   2. Rent freezes like NYC.
   3. Rental Property seizures due to “neglect” like NYC.
      1. So they can become low income housing.
   4. Decrease in investment real estate values due to the negative impact of the above and open borders and sanctuary states/cities.

How to protect yourself

1. VOTE!
2. Voice your opinion on matters that impact you.
3. Double your oversight on your businesses and properties.
4. Review your entity types (S Corp, Sole Prop, Partnership, LLC) to make sure you are tax advantaged.
5. Pull income into 2026 to minimize taxes in 2027 in case of tax hikes.
6. Consider moving to a more capitalist system.

Remember, the moment you have a business or tax question is the moment you should be calling me.

Chris Whalen, CPA
(732) 673-0510
81 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com

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