Cut Inflation Act to get $20 billion in taxes from people earning less than $400,000: nonpartisan study
President Joe Biden will sign the Cut Inflation Act into law tomorrow, the White House announced Monday
Americans earning less than $400,000 a year could end up paying $20 billion in new tax revenue brought in by Democrats’ Cut Inflation Act, according to a recent analysis of the bill.
The nonpartisan Congressional Budget Office (CBO) found on Aug. 12 that an amendment by Republican Sen. Mike Crapo would have made the legislation $20 billion less than in its current format.
His measure would have ensured that Americans earning less than $400,000 would not be targeted by the $80 billion IRS expansion included in the bill.
Crapo’s amendment did not pass, nor did the CBO score the legislation until it first passed the Senate along party lines in a 51-vote. 50.
The Democratic-controlled House of Representatives passed the bill on Friday.
No Republicans in either house voted for the bill.
The White House just announced that President Joe Biden will sign the bill into law on Tuesday.
But the CBO’s analysis showing that middle-class Americans will pay new taxes contradicts Biden’s promise not to increase penalties for people earning less than $400,000.
The CBO also found that the impact of the Inflation Reduction Act on soaring consumer prices would be “negligible”.
This comes despite Treasury Secretary Janet Yellen writing a letter to the IRS urging it not to use the extra funds for this group of taxpayers.
“I direct that any additional resources – including any new staff or auditors hired – not be used to increase the share of small businesses or households below the $400,000 threshold that are audited from historical levels” , wrote Yellen’s letter sent last week. .
Senate Democrats led by Majority Leader Chuck Schumer passed the bill with party direction in a 51-50 vote early last week
Conservative Democratic Senator Joe Manchin of West Virginia played a key role in negotiating and promoting the legislation
“This means that, contrary to misinformation from opponents of this legislation, small businesses or households earning $400,000 a year or less will not see an increased chance of being audited.”
The increased IRS funding, which aims to add 87,000 new officers over 10 years, is also expected to bring in $180 billion for Americans in higher tax brackets.
Details on the Inflation Reduction Act of 2022
Senators Joe Manchin and Chuck Schumer’s new bill will generate $739 billion in new revenue through various proposals:
$313 billion by implementing a minimum corporate tax of 15%
$288 billion from empowering Medicare to negotiate lower drug prices
$124 billion from IRS strict enforcement of tax laws
$14 billion from closing the carried interest loophole for fund managers
The GOP wins in the addition:
Republicans forced Democrats to remove a provision from the bill that would cap the price of insulin at $35
Senator John Thune’s Amendment Exempts Certain Businesses from Newly Enacted 15% Corporate Tax Minimum
The bill also includes $433 billion in new spending:
$369 billion for energy security and climate change
$64 billion to expand health care subsidies for Affordable Care Act
All of this would leave $300 billion to reduce the deficit
It comes after a report by the Joint Committee on Taxation (JCT), commissioned by Senate Republicans, predicted that the bill’s 15% minimum corporate tax would lead to tax increases for Americans in all income brackets.
Biden’s press secretary Karine Jean-Pierre gave a curvy response when confronted with the report during her first appearance on a Sunday news program in her role as official House spokesperson. White.
This week’s ABC News host Jon Karl asked: ‘It’s called the Inflation Reduction Act, but the Congressional Budget Office, which is nonpartisan, said it would have a negligible impact on inflation this year and that it would barely have an impact on inflation next year.” I mean, isn’t that almost Orwellian – how can you call it an inflation reduction law? »
‘I appreciate the question. We actually addressed that, the CBO. That was the mainline number, there’s more in there that shows he’ll get the money from — remember how we do that too, that’s make sure corporate American billionaires pay their fair share, making sure that’s – that the tax code is a little fairer, and so when you do that, when you put it all in, you’ll see it’s going to lower – lower the deficit , which will help fight inflation,” Jean-Pierre offered.
‘Look, here’s the thing. We have 126 economists, Republicans and Democrats, who have said this is going to fight inflation.
She accused Republican lawmakers of making a “false” argument by citing CBO and JCT figures.
“He will fight against inflation. It has been proven, it has been said by economists from all sides on the Republican side and on the Democratic side – on the Democratic side,” Jean-Pierre said.
The package contains about $740 billion in new revenue proposals and $433 billion in new spending.
In addition to increased funding for IRS enforcement, it includes a 15% minimum corporate tax, a host of green energy tax incentives, and allows Medicare to negotiate lower drug costs. .
It also caps pharmacy fees for 50 million Americans on Medicare at $2,000 a year.
The package also represents $369 billion for energy security and climate change and $64 billion to expand healthcare subsidies for the Affordable Care Act.
It leaves $300 billion to reduce the deficit.