WASHINGTON, DC — On July 28, 2022, after meeting with his Senate Democratic colleagues and hearing Majority Leader Chuck Schumer (D-NY) outline a landmark tax, climate, and health-care package that will help lower inflation, boost American clean energy, and reduce the deficit, U.S. Senator Jack Reed (D-RI) issued the following statement:
“This represents a real breakthrough and it’s a major win for working families and taxpayers. I am encouraged by and supportive of this agreement to reduce inflation, lower energy and health costs, and cut the deficit. This agreement includes a substantial package of inflation-fighting measures that will help Rhode Island families afford healthcare, energy, and other necessities. It makes historic and overdue investments in addressing climate change and cutting pollution and greenhouse gas emissions. It will also boost domestic clean energy production and accelerate the transition toward renewable energy. And it is fully-paid for, directs real savings toward reducing the deficit, and helps ensure the largest corporations and Wall Street’s private equity managers pay their fair share in taxes – something millions of hardworking Americans and small businesses already do each year.”
Highlights of the Inflation Reduction Act of 2022 include:
Lowering Prescription Drug Costs and Making Health Care More Affordable
The bill would allow Medicare to directly negotiate prescription drug prices with big pharmaceutical companies, saving the federal government an estimated $288 billion over the next decade. The bill also includes a $2,000 out-of-pocket cap for older adults buying prescriptions from pharmacies, would provide free vaccinations for seniors, and helps keep health insurance affordable for millions of Americans.
Investing in American Clean Energy Production & Tackling Climate Change
The bill would invest $369 billion over the next decade to help fight climate change by ramping up America’s wind, solar, geothermal, battery storage, and other clean energy technologies. The package represents the single biggest climate investment in U.S. history and would bring down consumer energy costs while putting America on a path to cut greenhouse gas emissions 40 percent over 2005 levels by 2030. Among other provisions, the bill would extend clean energy tax credits, enhance incentives for electric vehicles, and create new rebates for low-income consumers to electrify home appliances and for energy efficient retrofits.
Fiscally Responsible Pay-Fors
The bill does not raise taxes on small businesses or families making less than $400,000 a year. It targets tax breaks and incentives to consumers, such as a $4,000 tax credit for purchase of used electric vehicles and $7,500 for new ones.
To prevent large corporations from using dodges and loopholes to avoid paying virtually any tax, the bill includes a new 15 percent minimum income tax for corporations that earn more than $1 billion in annual profits. It also significantly boosts the IRS’s ability to go after wealthy tax cheats, which will help produce a net gain of $124 billion or more for taxpayers over the next decade. The bill also reduces the “carried interest loophole” that currently allows private equity and hedge fund managers to pay taxes on some compensation at lower capital gains rates.
Paying Down Deficits
Overall, the agreement would produce an estimated $739 billion in new revenue and some $433 billion in new investments, and the bill would direct the difference – an estimated $300 billion — to deficit reduction.
The bill could reach the U.S. Senate floor as early as next week as part of a budget reconciliation package. That would allow the measure to be passed with a simple majority that would not be subject to a Republican filibuster.