A Comprehensive Overview of the Inflation Reduction Act (IRA)
This past weekend, the Senate passed a climate, Medicare and tax overhaul act titled the Inflation Reduction Act (IRA) at a 51-50 split. The 755-page bill is headed to the House of Representatives, where they expect to vote on the legislation on Friday, August 12.
The IRA is being credited as one of the most significant forms of legislation to be passed by the Democratic Party since The Affordable Care Act was passed in 2010. Unfortunately, the bill is seen by many economists as mistitled as several parts of it contradict each other. Despite rebranding it the “Inflation Reduction Act,” the bill could possibly increase inflation in the short term and would not reduce inflation over the long term.
From NPR – “The proposal won't help curb inflation dramatically nor right away, experts say.”
These three provisions make the bill unworkable for business:
The Corporate Book Minimum Tax — Raising taxes on companies when they make certain investments, like 5G network expansion or new energy production. Discouraging investment will make America poorer and reduce economic growth.
A new excise tax on stock buybacks would distort the efficient movement of capital and diminish the value of Americans’ retirement savings.
Price controls on medicines would reduce private sector investment in new drugs.
If we want to get inflation under control and avoid a deep recession, we must address the ongoing worker shortage by getting more workers back into the labor force. Moreover, this is the absolute wrong time to increase taxes on American job creators or implement price controls on American innovators.
We understand the importance of tackling climate change and increasing our clean domestic energy program, lowering healthcare costs, and comprehensive tax reform, but we urge Congress to reject and rework this misguided legislative package and focus on getting Americans back to work, lowering inflationary costs, and avoiding a recession.