Congress Just Passed the Inflation Reduction Act. It Will Hike Taxes on Some Middle-class Households.

It also spends billions on new green energy programs, and it lets the IRS hire 87,000 new agents.

Congressional Democrats have put the finishing touches on a questionable bet: that higher taxes will help tame rising prices, and that voters will reward the effort.

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On Friday afternoon, the House of Representatives approved a $300 billion tax hike with a party-line vote, 220–207, sending the Inflation Reduction Act to President Joe Biden’s desk. It passed the Senate with a similar party-line vote on Sunday.

Despite the bill’s name, independent analysts have found it will have virtually no impact on inflation. In reality, it is a pared-down version of what Biden originally pitched as the “Build Back Better” plan—it leaves aside much of the original bill’s spending, but it maintains a huge corporate tax increase, huge spending on green energy initiatives, and a plan to swell the ranks of IRS agents. What was originally a roughly $4 trillion proposal that would have relied heavily on borrowing ended up being something of a rarity in Washington: a bill that will raise more revenue than it spends.

And where will it get that revenue? Quite possibly from you. Households earning as little as $50,000 annually are more likely to see a tax increase than a tax break from the legislation.

In the final hours before the House vote, the Joint Committee on Taxation (JCT) completed a breakdown of how the bill’s corporate tax increases would affect households at various income levels. The JTC, a nonpartisan number-crunching agency within Congress, found that households earning between $50,000 and $75,000 are more likely to see a tax increase than a tax decrease next year.

Higher-earning households are more likely to see tax increases, but households earning more than $1 million next year are actually far more likely than lower-earning households to get a tax break.

That fits with what The Tax Foundation, a tax policy think tank, found when it analyzed the bill. The Inflation Reduction Act will “would also reduce average after-tax incomes for taxpayers across every income quintile over the long run,” the Tax Foundation reported on Wednesday. Those tax increases will reduce long-term economic output by about 0.2 percent and could eliminate 29,000 jobs, the group found.

Democrats pushed the bill as a cost-cutting measure that would help Americans make ends meet, reduce the federal budget deficit, and help protect the environment.

“It makes a difference at the kitchen table,” Pelosi said at a press conference on Friday morning. “And at the board room table, corporations will now have to pay their fair share.”

If only those two things could be separated as cleanly as Pelosi implies. Tax increases on corporations get passed along from the board room table to the kitchen table in a variety of ways: lower pay for workers, higher prices for consumers, and smaller investment returns for shareholders.

As Reason has detailed a length in recent weeks, other aspects of the bill also leave much to be desired. It would dedicate about $300 billion of new revenue to reduce the long-term budget deficit, but that aspect of the bill is probably better understood as a plan to actually pay for about an eighth of the borrowing that Congress has approved since Biden took office. Meanwhile, giving the IRS a massive budget boost so it can hire 87,000 new agents likely means more tax audits aimed at the middle class, no matter what Democrats are currently claiming. The expanded subsidies for purchasing of health insurance via the Affordable Care Act’s marketplaces is likely to push inflation higher. And the bill’s aim to reduce carbon emissions to 40 percent below 2005 levels by 2031 may be plausible, but just barely.

Perhaps the only aspect of the Inflation Reduction Act that’s as bizarre as its name is the meta-analysis of the bill that’s been taking place in political media. Its passage is a “win” that “could give Democrats a boost heading into the midterms,” according to NPR. It “will help validate the Democrats’ monopoly on political power in Washington and hand Joe Biden a notable presidential legacy ahead of November’s midterm elections,” gushed CNN’s Stephen Collinson.

Time will tell, but this sounds like a reprise of the claims that were made after last year’s bipartisan infrastructure package—which, regardless of what you think about its merits, plainly hasn’t done much to reverse Biden’s flagging approval rating.

Click here to read the full article at Reason


  1. Will probably reduce inflation for the insiders and trough eaters by giving them large chunks of fiat while the abuse for everyone else increases exponentially.

  2. Gone are the days when pols were thoughtful, sane, logical and used common sense. Gone are the days when pols actually gave a sh*t about their constituents!!! The majority of them leave office with more than a fistful of extra cash!!! Their salaries could NOT enable them to buy those mansions!!!

    This is one more affront to the dignity of the working person!!! WE are who they hate – WE are the peons in their world – WE NEED TO STOP!!!! Stop voting for them! Stop talking about them!! Stop listening to their poison on the lamestream media!!!

    WAKE UP – We the People are PISSED!!!!!!

  3. There will be no such thing as a “Inflation Reduction” how in the world is it going to be paid down? The way it will be paid down will be by anyone who is a taxpayer or a consumer when they buy at the much more inflated costs we are already enduring in order for the Government to confiscate more of our taxes to pay for their folly!


    • No the fascist party will not, repeat NOT be leaving office because the voting machines will still be used. If 2020 is not fixed then there will be no fair election going forward

  5. Let’s pray we even have an election in Nov
    Do you think the Dems will do anything ti keep power? They have everything to lose and they have lost their cover. We know who they are and what they are up to. Tried for Treason or call off election while they still have the chance. That is how many a nation in history has fallen into dictatorship. Pray!

    • ‘Eternal Vigilance is the Price of Liberty.’

      These Dem/Socialists are desperate again, and will try to repeat their steal of the 2020 elections.

      They are a sleazy lot, and We The People need to watch them carefully to root out suspicious activity surrounding our election processes and procedures. In a word: Don’t trust them.

  6. Typical of ‘tax and spend’ Dem/Socialists.

    They are good at disguising tax increases…and cocky enough to give the horrible piece of ‘legislation’ an obviously inaccurate title.

    November 2022: Purge elected Dem/Socialists from their jobs across the USA!


  7. You can be assured we will remember and reward you for your effort, by voting each and every one of you out of office!

    Our founders started a war over taxation without representation, too bad they couldn’t stick around to see what taxation WITH representation looks like!

  8. We are in a post condtitutional period.
    Most that is done in Washington today is unconstitutional. Not America. No American Dream without it.
    There is a war taking place between good and evil. No telling who wins. The stakes get higher every month.

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