The new Inflation Reduction Act of 2022 won't prevent recession but will raise taxes on thousands of Americans said Mike Crapo (R-ID), ranking member of the U.S. Senate Finance Committee.
“While Republicans’ pro-growth tax reform in 2017 reduced tax rates for all Americans in a way that increased the progressivity of the tax code and produced historic gains in job and wage growth, the Democrats’ approach to tax reform means increasing taxes on low- and middle-income Americans to fund their partisan Green New Deal. Americans are already experiencing the consequences of Democrats’ reckless economic policies," Crapo said in a statement. " The mislabeled ‘Inflation Reduction Act’ will do nothing to bring the economy out of stagnation and recession, but it will raise billions of dollars in taxes on Americans making less than $400,000.”
The Joint Committee on Taxation (JCT) released a report on July 29th estimating that the “Inflation Reduction Act” will raise taxes across all income brackets, affecting millions of Americans and directing over 50% of tax hikes toward citizens making under $400,000 a year.
JCT reports that in 2023, Americans making less than $200,000 a year—low and middle income taxpayers—will experience a $16.7 billion increase in taxation. Citizens making $200,000 to $500,000 will see a $14.1 billion total increase in taxes. JCT estimates that “Throughout the 10-year window, the average tax rate for nearly every single income category would increase” if the “Inflation Reduction Act” is passed.
"The more this bill is analyzed by impartial experts, the more we can see Democrats are trying to sell the American people a bill of goods," Crapo said. "Non-partisan analysts are confirming this bill raises taxes on the middle class and produces no meaningful deficit reduction when gimmicks are removed and the full cost is accounted for. It’s no wonder this bill, which was drafted behind closed doors, is being rushed through the Senate at record pace.”
According to UPenn Wharton Business School Budget Modeling, the “Inflation Reduction Act would reduce non-interest cumulative deficits by $248 billion over the budget window with no impact on GDP in 2031.” Because of this, Wharton concludes that “the impact on inflation is statistically indistinguishable from zero.”
The modeling found that the Act will slightly increase inflation until the year 2024 and then slightly decrease inflation. However, these changes cancel each other out, resulting in inflation reduction “statistically indistinguishable from zero.” The Inflation Reduction Act would have “no impact on GDP by 2031 and an increase in GDP of 0.2 percent by 2050.”
