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Dems’ spending bill hammers Americans with billions in new taxes

Tax experts are still trying to work out exactly what the so-called Inflation Reduction Act — a 755-page patchwork of giveaways, carveouts, and subsidies which purports to ease inflation by reducing the deficit and hiking taxes — will cost average Americans.

However, they agree on one thing: It’s likely to be a lot.

“Everyone is facing slightly less after-tax income in the long run,” Garrett Watson, a senior policy analyst and modeling manager at the Tax Foundation, told The Post.

The biggest reason for the confusion: The bill has yet to be scored in its entirety by the Congressional Budget Office — the nonpartisan agency that typically gives each piece of legislation a price tag before it is voted on. But the Inflation Reduction Act, a slimmed-down iteration of President Biden’s earlier multi-trillion-dollar Build Back Better proposal, came together so quickly it has yet to be fully analyzed.

“This is the world’s largest last-minute term paper,” James Lucier, managing director at Washington-based policy research firm Capital Alpha, told The Post Monday. “No one knows if the numbers add up and a lot of people aren’t even sure what’s in it anymore.”

“We’re still updating our modeling with how the bill has changed over the last few days,” Watson agreed. “The fact that there are so many last-minute changes to amendments makes it hard to keep track, for tax experts and everyday Americans.”

Tax experts are still trying to work out exactly what the so-called Inflation Reduction Act — a 755-page patchwork of giveaways, carveouts, and subsidies which purports to ease inflation by reducing the deficit and hiking taxes — will cost average Americans.

Senate Majority Leader Chuck Schumer holds a news conference after the Senate passed the Inflation Reduction Act during a marathon voting session known as a 'vote-a-rama."
Sen. Chuck Schumer’s bill has yet to be scored in its entirety by the Congressional Budget Office.

While the CBO is still crunching the numbers on the $740 billion energy and health care spending bill, they have made one thing clear: The legislation will have a “negligible” effect on inflation — the very problem it supposedly tackles — in at least 2022 and 2023.

“The real damage here is through this incredibly haphazard legislation: Passing massive bills without the usual quality control process, without committee hearings, without any of the things that really create quality legislation that can last a long time,” Lucier added.

Bernie Sanders
Bernie Sanders has slammed the “so-called” Inflation Reduction Act saying it will have “a minimal impact on inflation.”
Los Angeles Times via Getty Imag

While Americans wait to see just how badly the bill — which the House is expected to pass and send to President Biden sometime Friday — will beat up their wallets, Americans for Tax Reform has compiled a list of the biggest costs to families based on a combination of data from the CBO and Congress’ Joint Committee on Taxation.

They include:

  • A $6.5 billion regressive tax on American energy companies that will be passed on to families in the form of higher energy costs — and could hike the average household’s natural gas bill by 17%.
  • A 16.4 cent-per-barrel tax on imported crude oil and petroleum products that will be passed on to families looking to fill up their car with gasoline — amounting to a $12 billion tax on purchasers of oil or gas products.
  • An increased tax rate on mined coal, which is supposed to bring in an extra $1.2 billion, and will also raise the cost of families’ energy bills. The levy on subsurface-mined coal will jump from 50 cents per ton to $1.10 per ton. Surface-mined coal will be taxed at 55 cents per ton instead of 25 cents per ton.
  • A new 15% tax on corporations reporting at least $1 billion in profits to shareholders, known as “book value.” Democrats say it will raise an estimated $313 billion, but critics say the tax will also be passed on to Americans in the form of higher prices, less hiring, and wage cuts.
  • The $124 billion stock buyback tax, which will likely mean 401(k)s, IRAs and pensions shrink for most Americans — given retirement accounts make up nearly 37% of the $22.8 trillion stock market.
  • $80 billion thrown at the IRS to help the agency collect under-reported income is supposed to return $124 billion to the federal government, but will end up targeting small business owners. Between 78% and 90% of the estimated additional $200 billion the IRS will collect will come from Americans making less than $200,000 annually, according to the Joint Committee on Taxation.
  • A 95% excise tax on drugmakers that could cost more than $1 trillion over the next decade by decreasing the development and introduction of new drugs.
  • $52 billion that will be raised as part of a tax increase on businesses not subject to the corporate income tax, which will hurt mid-sized and family companies.

Even though legislation can be thrown together quickly, the reverberations of these tax hikes are expected to be felt for a while, with Watson even predicting full implementation of the law would take “a couple of years.”

“For instance this minimum book tax will require a lot of regulation to apply it to corporations that have question about every nook and cranny of the law,” Watson said. “This is far from over.”

“We can’t afford to go through a process like this again,” Lucier added. “A mess like this damages the reputation of Congress as a legislative body. This is not the way the system is supposed to work.”

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