Inflation Reduction Act Will Raise Taxes On Middle Class, Cost 30,000 Jobs, Decrease GDP Report Says

Joe Biden’s ‘Inflation Reduction Act’ will raise the tax rate on people making less than $10,000 a year, according to data released by the nonpartisan Congressional Joint Committee on Taxation (JCT)

In 2023

• individuals making less than $10,000 per year would pay 3.1% more in taxes
• those making between $20,000-$30,000 per year would see a 1.1% tax increase
• Tax revenue collected from those making $100,000 per year or less would increase by up to 1.1% or $5.8 billion in 2023

Senate Finance Committee Ranking Member Mike Crapo, R-Idaho, who requested the analysis, said in a news release,

“The mislabeled ‘Inflation Reduction Act’ will do nothing to bring the economy out of stagnation and recession, but it will raise billions of dollars in taxes on Americans making less than $400,000.  The more this bill is analyzed by impartial experts, the more we can see Democrats are trying to sell the American people a bill of goods. Non-partisan analysts are confirming this bill raises taxes on the middle class and produces no meaningful deficit reduction when gimmicks are removed and the full cost is accounted for. It’s no wonder this bill, which was drafted behind closed doors, is being rushed through the Senate at record pace.”

In addition, Republicans on the Senate Finance Committee said that when the new energy credits and subsidies are set to greatly benefit wealthier Americans, people making less than $400,000 will be paying two-thirds of the additional taxes collected in 2031,

A detailed analysis was released by the Tax Foundation:

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.