The Inflation Reduction Act was recently signed into law by the Biden Administration. The goal of this act is to build back an economy that is beneficial for all hard-working American families. There are several details incorporated into this bill that will be broken down throughout this article.
Lowering Costs for American Families
According to the Biden Administration, the Inflation Reduction act will lower the cost of several things that have been burdening U.S. families for quite some time now. Prices are expected to be reduced for prescription drugs, this can potentially be a huge help for people that have to take a lot out of their wallets for the medicine that they need.
On top of lowering the costs of prescription drugs, the act is supposed to lower healthcare costs. Everyone needs some sort of healthcare so being able to pay less for it can potentially save a ton of money for hardworking American families. Part of lowering the highly expensive prescription drug costs is the introduction of a cap for out-of-pocket costs. For example, people that need insulin will not have to pay any more than $35 out-of-pocket.
Every American has seen the prices of gasoline and other energy costs, such as electricity and oil soar through the roof over the past several months. The Biden administration included the reduction of energy costs in the Inflation Reduction Act, which will hopefully help those gas prices level out and become much more affordable.
Clean Energy Jobs
According to the White House, the Inflation Reduction Act will create well-paid union jobs that will lower emissions throughout every aspect of the economy. Additionally, to promote an America with cleaner energy, the act includes tax credits for commercial buildings that are more energy efficient.
Who Will Pay More in Taxes?
Lowering the tax deficit is something that the Biden administration has been talking about for quite some time now. Part of the act calls for the ultra-wealthy and American Corporations to “Pay their fair share.” The administration also said that anyone making less than $400,000 per year will “not pay a penny more” in taxes than what they are currently paying.
No tax increase on those earning under $400,000 is up for debate though, as the IRS is getting additional funding and staff support. While there may not be anything specifically changed in the tax code to target lower-earning taxpayers, they should be on the lookout for increased compliance enforcement coming from the IRS, which may have undesirable effects.
Enforcing the Tax Code
A key part of the act is cracking down on the taxpayers who do not comply with the tax code. The Biden Administration feels that taxpayers evade their tax obligations when it is time to file. With the addition of 87,000 IRS agents, the IRS will be going after tax evaders more than they ever have before, making sure that everyone pays the taxes that they owe. Not just the wealthy.
Corporate Tax
President Biden and his team have strong opinions that the largest American Corporations get away with paying little to no federal income tax. This is why the administration has decided to incorporate a minimum corporate income tax of 15%.
Wrap Up
A lot of details in the Inflation Reduction Act don’t have much to do with the problem at hand, which is combatting inflation. According to economic experts, the things included in the act will have a very beneficial financial change, but will primarily only be seen in the long run. The plan could reduce inflation by 0.1% within five years after the act is initiated. Will this help the American People in the short term?