The Inflation Reduction Act (IRA) was enacted in August 2022. It was presented the Biden administration as a tool for reducing the Americans’ energy bills to create sustainable jobs and equip countries to tackle the climate crisis.
It is undeniably the biggest step Congress has ever taken to combat climate change.
The IRA includes nearly $370 billion dollars in investments to support disadvantaged communities, projects transition from fossil fuel infrastructure and employing displaced workers, putting the United States to a clean, fair, equal and economic path.
What’s in the Inflation Reduction Act of 2022?
This reform combines many aspects, starting with an extension of Medicare benefits to include access to free vaccines, a cap on insulin prices at $35 per month, and a cap on prescription drug prices to $4,000 in 2024 and $2,000 in 2026. It is also designed to reduce the cost of domestic energy combined a shift towards «clean» energies. On this last point, tax breaks are granted to reduce carbon emissions by 40% by 2030.
The tax system is not left out, with the introduction of a new corporate tax of 15% minimum (to limit tax avoidance strategies by large companies) and 1% commission on share purchases.
A section is also dedicated improving tax assistance and law enforcement with an investment of 80 billion over the next 10 years.
Federal subsidies under the Affordable Care Act are extended until 2025. These subsidies reduce the cost of health insurance premiums for registered.
The Inflation Reduction Act in a few figures
INVESTMENT
A $369 billion plan for energy security and the fight against climate change.
64 billion dollars will be disbursed as part of the extension Affordable Care Act.
EXPECTED REVENUES:
288 billion dollars from prescription drug pricing reform.
124 billion dollars recovered through tax enforcement efforts.
14 billion dollars in efforts to close tax loophole on deferred interest.
It is expected that the introduction of the federal is set to generate $313 billion in additional tax revenue.
Who introduced the inflation reduction law?
The legislation is the fruition of the Biden administration and its allies on Capitol Hill who have long pushed to lower drug prices, a more progressive tax code and efforts to combat the world’s worsening climate crisis. This followed weeks of standstill within the Democratic Party, negotiations often at a stalled. But legislators finally agreed and presented a final version.
How does the Inflation Reduction Act affect taxes?
The Inflation Reduction Act is designed to meet Joe Biden’s campaign promise not to tax families or small businesses earning less than $400,000 per year, although critics in the Republican Party say it will have an indirect effect via corporate tax increases.
And there’s a new corporate tax. The companies generating more than billion a year will have to pay a minimum tax of 15%. It is designed to close loopholes that allow hundreds of companies to avoid paying the standard federal corporate tax of 21%.
The bill is expected to generate more savings than the cost of implementing it. In addition to its many environmental and economic virtues, if these objectives are achieved, it will have a significant impact on the environment and economic virtue on the federal deficit.
