Benefits of the Inflation Reduction Act
On Tuesday, August 16, President Biden signed the Inflation Reduction Act into law. This bill is a hugely important piece of legislation that will benefit Americans on multiple fronts, including climate change, healthcare, and tax equality.
The Inflation Reduction Act is the biggest piece of climate legislation ever enacted. It grants massive incentives for clean energy, both for producers and consumers. The bill guarantees $300 billion in loans for clean energy infrastructure, transmission projects, and technology, giving an additional $60 billion for manufacturing to the entire US supply chain of clean energy and transportation technologies. Not only will these funds bring environmental benefits, but they will also help keep prices low, combating inflation. There are also incentives for consumers, especially those in the lower-to-middle income brackets, including a $4,000 tax credit for buying used clean vehicles, a $7,000 tax credit for buying new clean vehicles, and $9 billion devoted to programs that make homes more energy efficient. Under the bill, clean energy such as solar panels will be more affordable and accessible to lower-income housing. It also provides relief to communities harmed by pollution, especially lower-income communities, which are the most impacted by air pollution.
The Inflation Reduction Act will also make healthcare more affordable. It allows Medicare to negotiate prescription drug prices, with steep penalties for companies who refuse to negotiate. Starting in 2025, it caps drug prices at $2,000 per year for seniors on Medicare. It penalizes drug companies who raise prices faster than the rate of inflation. Keeping drug prices low not only helps people afford life-saving medication, it also helps lower inflation. Additionally, the bill extends financial aid for the Affordable Care Act for three more years, assisting those enrolled in ACA plans to afford premiums.
The Inflation Reduction Act, in a somewhat controversial move, also increases funding for the Internal Revenue Service. The IRS has been underfunded for a long time. As a result, its situation has worsened year-by-year as its budget drops, its technology becomes outdated, and it loses staff in a steady stream. Nobody likes getting audited, or paying taxes for that matter, so funding the IRS is politically damaging. But the Inflation Reduction Act bravely prioritizes doing the right thing over politics and optics by granting $80 billion in funding to the IRS. This is money that will pay for itself many times over. Currently, America has a massive tax gap: there is a significant discrepancy between the amount of money owed in taxes and the amount of money collected. This is largely because the struggling IRS is only able to prosecute a fraction of the tax fraud that is occurring. Once it has the funding it needs, it can pursue the large corporations and the richest of the rich who are squirreling their money away. When the wealthy avoid paying their taxes, all it does is increase the burden on the middle- and lower-classes. Despite its unpopularity, the IRS having the ability to audit the wealthiest corporations will make life easier for the working-class and massively increase revenue for the federal government.
The Inflation Reduction Act will help so many people in so many ways. It is not just a partisan victory for the Democratic Party: it is a victory for America.