The Inflation Reduction Act was shaped largely by Senator Kyrsten Sinema (Democrat of Arizona), who was another centrist holdout and resisted many tax increases that her colleagues supported. It eliminated most spending that would have been used to expand the nation’s social security net and rescinded plans to repeal elements of the 2017 tax law passed under the Trump administration.
The bill will move the Biden Administration towards fulfilling its pledge to reduce emissions by roughly half by 2030. However, scientists and climate activists warn that Congress and the executive will need to take more action to achieve that goal. This legislation will use the tax code as a way to encourage companies and consumers to invest in solar panels, electric vehicles, and other renewable energy sources such as wind power and solar power. It also provides the infrastructure needed to make more domestically.
This package provides millions in climate resilience funding for tribal governments, as well as $4 billion to address droughts across the West. It also introduces penalties for fossil fuel firms that emit excessive amounts of methane, which is a greenhouse gas.
Democrats include a three year extension of expanded health insurance subsidies, which was first approved last year in the $1.9 trillion pandemic assistance law. This is part of a long-standing effort to increase health care access throughout the country. It would give seniors free vaccines and allow Medicare to negotiate up to 10 prescription drug prices initially. This will be in place starting in 2026. The bill would also cap Medicare beneficiaries’ annual out-of pocket drug costs at $2,000. The bill would also limit insulin costs to $35 per month for enrollees.
The package would include a 15% minimum tax on companies reporting more than $1B in book income to shareholders and profits to shareholders. In addition, a 1 percent tax would be imposed on stock buybacks by corporations beginning in 2023. Democrats believe the legislation will also invest $80 million in the I.R.S. to help boost the agency’s finances and crack down on tax evaders and corporations wealthy. This provision is expected to generate $124 trillion over a ten-year period.
Republicans have focused much of their anger on the provision, calling it a heavy-handed attack against lower- and middle class taxpayers. Janet L. Yellen (the Treasury secretary) instructed the agency to respond to the criticism this week. She wanted to make sure that audit rates would not rise for small businesses and families earning less than $400,000.