LogFAQs > #966905960

How does a bill that has $400B in credits and subsidies, paid for with a tax that will raise $300B over a decade, reduce inflation with the $300B they're saying is set aside to reduce the deficit? Am I taking crazy pills here? The bill costs $100B more than it raises just for the tax incentives, BEFORE setting aside another $300B for deficit reduction.

I'm not saying there aren't any good things in the bill (especially the medicare part). I just don't see the inflation fighting.

https://www.bbc.com/news/world-us-canada-62339593

The so-called Inflation Reduction Act also comes as the White House seeks to calm mounting fears of a recession. Data released on Thursday showed the US economy has shrunk over two consecutive quarters.

The bill invests $369bn (305bn) into tax incentives for renewable energy production. That includes $60bn in tax credits for clean energy manufacturing, $30bn in tax credits for wind and solar production, and tax breaks for consumers who go green - such as a $7,500 write-off on new electric vehicle purchases for anyone making $75,000 or less annually.

Also included in the package is a three-year $64bn (53bn) extension of health insurance subsidies purchased through the government marketplace. Consumers were soon to be informed their rates will go up later this year, but the move ensures that will not happen.

Much of the revenue for the bill is raised by a new 15% minimum tax on corporations that earn more than $1bn in annual profits.

The Biden administration has been negotiating with several countries around the world since last year on a 15% global minimum corporate tax, in an effort to limit international tax havens. If executed in the US, the tax will target some 200 US corporations and raise some $313bn (258bn) over the next decade, Democrats say.

The legislation also raises money by beefing up tax enforcement, closing what's viewed as a tax loophole for investment managers, and lowering prescription drug costs for seniors by allowing Medicare - the government health insurance programme for the elderly - to negotiate drug prices.

Democrats say the proposal would put $300bn towards reducing a federal deficit that rose sharply during the Covid-19 pandemic.