After a weekend vote-a-rama, the Senate passed the Inflation Reduction Act. On a partisan vote with a tie-breaking “aye” cast by Vice President Kamala Harris, the Inflation Reduction Act (IRA) is now on its way to the House. The bill is the largest single American investment to slow global warming, including $260 billion in environmental tax credits. It would broaden healthcare premium subsidies available through the Affordable Care Act, levy a 15 percent corporate minimum tax on profits large companies report to shareholders, and enact a 1 percent excise tax on stock buybacks. Also under the bill, the IRS would receive an additional investment of $80 billion to enhance its enforcement efforts. The House is expected to return to the capital this week to pass the bill.
TaxNotes identifies 77 companies that will likely pay the new corporate minimum tax. Marty Sullivan reports in a TaxNotes analysis (paywall) on what companies will likely be subject to the corporate minimum tax in the IRA. Sullivan identifies 77 companies that would likely be subject to the tax and another 47 that could fall within the minimum tax’s parameters. It estimates that the aggregate revenue from the new tax in calendar year 2023 would be $39 billion.
The cost of fighting climate change is… more oil drilling. TPC’s Thornton Matheson writes about the “Faustian bargain” embedded in the IRA. It includes about $260 billion in environmental tax credits, the most important of which are the renewable energy production tax credit and investment tax credit. But the IRA also improves terms for US oil and gas exploitation. This inefficient contradiction seems to be “the only way the US can enact meaningful climate policy changes under current political conditions,” Thornton concludes, adding that “the urgency of the IRA’s important environmental measures makes them worth the cost.”
Tune in Thursday for TPC’s Prescription with AEI’s Kyle Pomerleau. Pomerleau, a senior fellow at the American Enterprise Institute, will discuss the tax provisions in the Inflation Reduction Act and how the legislation could impact the economy. Register here for the noontime discussion on August 11.
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