WASHINGTON, DC — Vice President Kamala Harris cast the tiebreaking vote on the bill in the US Senate on Monday for sweeping tax reform. Not one Republican voted for the legislation that Democrats claimed will help decrease inflation. After all, the bill is called the Inflation Reduction Act of 2022. The bill is expected to pass the US House that is narrowly controlled by the Democratic party when it is scheduled for a vote on Friday. Congressman August Pfluger, a Republican who represents CD-11 that includes San Angelo, is solidly against the package.
The bill will likely be signed into law Friday after the House votes. What is in the bill? Here are some of the highlights of the Inflation Reduction Act of 2022, as compiled by Americans for Tax Reform:
1. $6.5 Billion Natural Gas Tax Which Will Increase Household Energy Bills
The bill imposes a regressive tax on American oil and gas development. The tax will drive up the cost of household energy bills. The Congressional Budget Office estimates the natural gas tax will increase taxes by $6.5 billion.
The tax hike violates President Biden’s tax pledge to any American making less than $400,000 per year. Biden administration officials have repeatedly admitted taxes that raise consumer energy prices are in violation of President Biden’s $400,000 tax pledge.
A letter to Congress from the American Gas Association warned that the methane tax would amount to a 17% increase on an average family’s natural gas bill. Democrats have included a tax in the bill despite retail prices for energy surpassing multi-year highs in the United States.
2. $12 Billion Crude Oil Tax Which Will Increase Household Costs
With gas averaging more than $4.00 per gallon across the country and only weeks removed from record-high prices, Democrats have included a 16.4 cents-per-barrel tax on crude oil and imported petroleum products that will be passed on to consumers in the form of higher gas prices.
The tax hike violates President Biden’s tax pledge to any American making less than $400,000 per year.
As noted above, Biden administration officials have repeatedly admitted taxes that raise consumer energy prices are in violation of President Biden’s $400,000 tax pledge.
As if it weren’t bad enough, Democrats have pegged their oil tax increase to inflation. As inflation increases, so will the level of tax.
The non-partisan Joint Committee on Taxation (JCT) estimates the provision will raise $12 billion in taxes.
3. $1.2 Billion Coal Tax Which Will Increase Household Energy Bills
The bill would more than double current excise taxes on coal production. Under the Democrat proposal, the tax rate on coal from subsurface mining would increase from $0.50 per ton to $1.10 per ton while the tax rate on coal from surface mining would increase from $0.25 per ton to $0.55 per ton.
JCT estimates that this will raise $1.2 billion in taxes that will be passed on to consumers in the form of higher electricity bills.
4. Corporate Income Tax Hike on U.S. Businesses Which Will Be Passed on to Households
Democrats imposed a 15 percent corporate alternative minimum tax on the financial statement income of American businesses reporting $1 billion in profits for the past three years. These American companies employ millions of Americans.
The cost of this tax increase will be borne by working families in the form of higher prices, fewer jobs, and lower wages.
A Tax Foundation report from last December found a 15 percent book tax would reduce GDP by 0.1 percent and kill 27,000 jobs.
The most recent cost estimate from the Congressional Budget Office found the provision would increase taxes by more than $313 billion.
According to JCT’s analysis, 49.7 percent of the tax would be borne by the manufacturing industry at a time when manufacturers are already struggling with supply-chain disruptions.
Tax Foundation also warned that current supply chain issues could be worsened by the book tax’s disproportionate burden on key industries. The report concluded that “the coal industry faces the heaviest burden of the book minimum tax, facing a net tax hike of 7.2 percent of its pretax book income, followed by automobile and truck manufacturing, which faces a 5.1 percent tax hike.”
5. $124 Billion Stock Tax Which Will Hit Your Nest Egg — 401(k)s, IRAs and Pension Plans
When Americans choose to sell shares of stock back to a company, Democrats will impose a new federal excise tax which will reduce the value of household nest eggs. Raising taxes and restricting stock buybacks harms the retirement savings of any individual with a 401(k), IRA or pension plan.
6. Union retirement plans will also be hit.
The tax will put U.S. employers at a competitive disadvantage with China, which does not have such a tax.
Stock buybacks help grow retirement accounts. Raising taxes and restricting buybacks would harm the 58 percent of Americans who own stock and more than 60 million workers invested in a 401(k). An additional 14.83 million Americans are invested in 529 education savings accounts.
Retirement accounts hold the largest share of corporate stocks, accounting for roughly 37 percent of the outstanding $22.8 trillion in U.S. corporate stock, according to the Tax Foundation.
In 2017, corporate-sponsored funds made up $4.45 trillion in market value; union-sponsored funds accounted for $409 billion; and public-sponsored funds, which benefit teachers and police officers, added up to $4.25 trillion.
When companies perform stock buybacks, these investors are the ones who benefit. A tax on buybacks could dissuade companies from conducting this action and negatively impact retirement savings.
7. 95% Federal Excise Tax on American Pharmaceutical Manufacturers
Democrats would impose a 95 percent excise tax on prescription drugs unless drug manufacturers accept government price controls.
In reality, all drug manufacturers would accept the price controls or stop selling the drug in the U.S. market entirely rather than pay the 95 percent tax.
This provision would restrict U.S. medical innovation and limit the supply of new medicines.
Price controls never work because they cause supply shortages. CBO warned the reduction in manufacturers’ revenue could be as high as $1 trillion over the next ten years and would “lower spending on research and development and thus reduce the introduction of new drugs.”
The CBO further stresses the “uncertainty” in assessing the number of new medicines that would be prevented from coming to market. The agency already revised its original assessment to increase the number of drugs prevented from being introduced by 50 percent.
8. $52 Billion Income Tax Hike on Mid-Sized & Family Businesses
Just as the U.S. economy slides into a recession, Democrats are including a tax hike on passthrough businesses with declared losses. This provision widens the net of taxable income. Preliminary cost estimates from the Joint Committee on Taxation show the provision will increase taxes by $52 billion.
Senate Democrats passed an amendment to the bill before final passage that created a two-year extension on loss limitations of noncorporate taxpayers if the amount of the loss is in excess of $250,000 ($500,000 in the case of a joint return). This provision was scheduled to sunset in 2026 under current law.
This provision would raise taxes on a manufacturer, retailer or other capital-intensive business that sees significant business losses in any year due to the cost of wages, rent, new equipment, inventory, and interest payments.
The loss limitation was originally created by the Tax Cuts and Jobs Act passed by Congressional Republicans but was used to offset the creation of the 20 percent deduction for passthrough businesses, resulting in a net tax cut for these businesses. Senate Democrats have now extended this loss limitation for two additional years to pay for their reckless tax and spend spree. They did not extend the 20 percent deduction for passthrough businesses.
This provision violates President Biden’s campaign pledge to small businesses: “Taxes on small businesses won’t go up.”
9. Supersizing the IRS to Increase Audits – $124 Billion
The bill would spend $80 billion to supersize IRS with 87,000 new agents and auditors and ramp up audits on working households and small businesses. The IRS would perform an additional 1.2 million annual audits under the plan. Democrats claim the increased spending on enforcement would net $124 billion.
The bill spends 14 times as much money for “enforcement” — such as small business audits — than for “taxpayer services” — such as answering the phone. IRS employees only answer the phone “19 or 20 percent” of the time.
The original piece is available at the Americans for Tax Reform. The headline was muted to get beyond Big Tech censors.