Now that Arizona Senator Kyrsten Sinema has agreed to vote for it, the Inflation Reduction Act will probably pass the Senate and become law. That is not good news for Americans.
The Conservative Treehouse points out some of the changes that were made to the law to get Senator Sinema to agree to vote for it:
Arizona Senator Kyrsten Sinema has announced her support for the senate climate change spending and tax proposal after some modifications to the new taxation.
To support the hedge fund donors, Senator Sinema insisted the carried interest loophole tax provision be removed and instead replaced with a corporate tax on stock buybacks. Any time a corporation wants to buy back their own shares of stock, they will now pay the U.S. government a tax for doing so; at least that’s the ¹intent.
[¹Note: taxing shares of company stock will never work, because that’s exactly what shell companies were designed to avoid. Set up a child shell company to purchase the stock and the parent company doesn’t pay taxes on the child’s purchase. It’s a shell game]
Additionally, according to reports, there is some kind of agreement to modify the 15% corporate minimum tax. Details unknown. Bottom line, Senator Sinema now supports the $700 billion climate change spending and tax proposal.
The Tax Foundation has an analysis of exactly what the financial impact of the bill will be:
Last-week’s Democrat-sponsored Inflation Reduction Act (IRA), successor to the House-passed Build Back Better Act of late 2021, has been touted by President Biden to, among other things, help reduce the country’s crippling inflation. Using the Tax Foundation’s General Equilibrium Model, we estimate that the Inflation Reduction Act would reduce long-run economic output by about 0.1 percent and eliminate about 30,000 full-time equivalent jobs in the United States. It would also reduce average after-tax incomes for taxpayers across every income quintile over the long run.
By reducing long-run economic growth, this bill may actually worsen inflation by constraining the productive capacity of the economy.
Our analysis contains estimates of the budgetary, economic, and distributional impacts of the Inflation Reduction Act as specified in bill text provided on July 27.
Using the General Equilibrium Model, we estimate that the tax provisions, IRS enforcement, and drug pricing provisions in the bill would increase federal revenues by about $656 billion over the budget window, before accounting for $352 billion in expanded tax credits for individuals and businesses, resulting in a net revenue increase of about $304 billion from 2022 to 2031.
Excluding the anticipated revenue from increased tax compliance and the drug pricing provisions, the bill would lose about $126 billion in revenue over the budget window.
The article includes the following chart:
The bill also includes almost $80 billion in appropriations for the Internal Revenue Service to put toward taxpayer services and enforcement. I suspect those of us in the middle class will feel that change. Even if your taxes are done correctly to the penny, the IRS can make you very uncomfortable. My husband and I experienced that after we donated to the tea party. The next year we were audited. We sent them all the applicable information, and they delayed the case for a year. They couldn’t find anything wrong, but they took a long time admitting that. The IRS does not need more money–it needs to go away and have our tax code replaced by something that people can understand and can fit on one sheet of paper.