Democrats’ Inflation Reduction Act passed the House of Representatives in a 220-207 vote on Friday after clearing the Senate last weekend, and with it, some big changes could be coming to key sectors of the U.S. economy.
The measure, though a slimmed-down version of President Joe Biden’s Build Back Better proposal, would pump billions of dollars into climate and healthcare programs, while levying new taxes on big companies and stock
buybacks to pay for it all.
Below is a look at some of the key provisions of the bill, which passed the Senate in a 51-50 vote on Sunday, as Vice President Kamala Harris broke a tie. No Republicans in the Senate or House voted for it, as the GOP argued the measure wouldn’t live up to its name as an inflation-fighting measure.
The legislation is expected to get signed into law quickly by Biden.
The bill includes $369 billion for climate and energy provisions and would accelerate the U.S.’s transition away from fossil fuels.
As MarketWatch reported, the bill’s energy and climate-focused
incentives are peppered with rebates and tax credits that will directly impact households. They address heat pumps, appliance efficiency, solar panels, electric vehicles
Sen. Joe Manchin, a key West Virginia Democrat, also said he’d secured a side agreement to advance an energy-permitting reform package before the end of September — which could make it easier to build pipelines.
Medicare would be able to negotiate the cost of some prescription drugs with pharmaceutical companies
under the deal — a provision that’s been blasted by the industry, which says the measure would throttle innovation.
The bill also caps out-of-pocket drug costs for Americans on Medicare at $2,000 a year, beginning in 2025.
Before the deal, 13 million people were facing higher health-insurance premiums next year. Now, Affordable Care Act subsidies will be extended for three years, sparing millions of Americans.
Democrats’ goal of lowering insulin prices for Medicare is expected to become law. But during a lengthy process to amend the bill over the weekend, Senate Republicans blocked a $35 price cap on insulin costs for patients on private insurance.
The bill’s 15% minimum tax for large companies that pay little or nothing in income taxes could hit big names like Amazon
and Tesla, Barron’s reported. The tax would apply to those that have averaged $1 billion of adjusted pretax profit in the past three years.
While the bill doesn’t directly raise taxes on middle-class households, Republicans have touted analysis saying the bill’s tax increases will hit working families with “higher prices, fewer jobs and lower wages.”
The Inflation Reduction Act also contains a 1% tax on stock buybacks. Some analysts, reported the Wall Street Journal, said they don’t expect the tax to dent companies’ enthusiasm for repurchases.
Democrats dropped a plan to close the so-called carried interest loophole in the face of opposition from Sen. Kyrsten Sinema, an Arizona Democrat. But, after pressure from Sinema, the party agreed to protect companies owned by the private equity industry from the new minimum tax.
This is an updated version of a report first published on Aug. 8, 2022.