Inflation Reduction Act criticized for raising taxes, not reducing inflation

[August 09, 2022]  By Kevin Bessler | The Center Square

(The Center Square) – As policymakers debate the so-called Inflation Reduction Act in Washington, many are saying claims of no tax hikes on the middle class are not true.

The massive bill includes tax incentives to help with the transition to clean energy, health insurance reforms, and raises corporate taxes on some corporations that make over $1 billion annually, taxing corporate stock buybacks and funding the IRS to go after tax cheats.

The proposed legislation does not include funding for many staples of Build Back Better, such as extended child tax credit payments, universal preschool or more affordable housing.

During debate, Illinois Sen. Dick Durbin made a promise to the American people.

“No one in America, no one earning less than $400,000 a year will see any increase in their taxes,” Durbin said.

But the grassroots organization Americans for Prosperity disagrees and points to an analysis by the non-partisan Joint Committee on Taxation (JCT) that shows the legislation would raise taxes. In 2023 alone, the JCT analysis shows that taxpayers earning less than $200,000 would pay $16.7 billion more in taxes, and taxpayers earning less than $500,000 would see a $30.8 billion increase.

Jason Heffley, Illinois director of the organization Americans for Prosperity, said the legislation has nothing to do with reducing inflation.

“They all have these catchy names, but these bills get so big that rarely the language of the bills mirror the titles that they give them,” Heffley said.

He points to the Penn Wharton Budget Model which said the impact on inflation is “statistically indistinguishable from zero.”

Another sticking point being debated involves SALT caps. Current law allows taxpayers to deduct state and local taxes (SALT) paid from their gross income when they file federal tax returns.

In 2017, President Trump’s tax overhaul capped how much filers can deduct in SALT taxes, up to $10,000, that would last until 2025.

House Democrats who were pushing to lift the cap said they will support the legislation even without a provision lifting the SALT deduction cap.

Heffley said the legislation would burden businesses and taxpayers while spending billions of dollars on failed health care policies and clean energy handouts.

“The Democrats in Washington say they are passing the Inflation Reduction Act but really all we are getting is higher taxes and more IRS agents,” Heffley said.

The Democrat-controlled House is expected to take up the legislation Friday, Aug. 12.

Kevin Bessler reports on statewide issues in Illinois for the Center Square. He has over 30 years of experience in radio news reporting throughout the Midwest.