Tax hikes, stagflation predicted in inflation reduction act

The breakthrough Inflation Reduction Act of 2022, drafted by President Joe Biden and the Democrats, is touted as a groundbreaking bill that would fight inflation, trim the deficit, and boost the growth of the green economy.

In addition to extending ACA subsidies, reforming prescription drug prices, investing in green energy, and closing the carried interest loophole, the bill proposes a 15 percent corporate minimum tax rate. According to Democrats, the plan will raise $739 billion in new revenue, create $370 billion in energy and climate change spending, and reduce the federal deficit by $300 billion.

According to critics, a growing number of studies are questioning whether the slimmed-down Build Back Better plan will achieve any of these goals.

“These point estimates are statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation,” the report stated.

“We project no impact on GDP by 2031 and an increase in GDP of 0.2 percent by 2050. These estimates include the impact of debt and carbon reduction as well as capital and labor supply distortions from rising tax rates,” the PWBM report stated.

2 August 2022