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Debate: Will the Inflation Reduction Act Cure What Ails Us?

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The Inflation Reduction Act of 2022 is a much scaled-down version of the sweeping tax and climate change bill that was initially introduced in Congress. The bill leaves out tax increases on wealthy individuals, changes to close estate planning loopholes, estate tax increases and even the SALT cap changes that many expected.

Instead, the bill would impose a corporate alternative minimum tax of 15% on domestic corporations with profits that exceed $1 billion. The tax would be imposed on the corporation’s adjusted financial statement income. The bill would also create new tax credits designed to combat climate change while extending and enhancing some existing energy tax credits.

To raise revenue, the law would also increase IRS funding by $80 billion over a 10-year period to increase enforcement and compliance.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about the Inflation Reduction Act of 2022.

Below is a summary of the debate that ensued between the two professors.

Their Votes:

thumbs up Byrnes
Thumbs down Bloink

Their Reasons:

Byrnes: This new legislation takes a much more reasonable and measured approach than prior incarnations. That said, the plan to impose a 15% corporate minimum tax on businesses with at least $1 billion in revenue is likely to backfire and add to our current economic uncertainty. But this legislation does not raise taxes at the individual level, which would have been devastating given the current inflationary environment. All in all, the compromise position it takes is something we can all live with.

Bloink: This legislation does nothing to make sure wealthy Americans are paying their fair share. By agreeing to such a scaled-down proposal, we’re allowing tax loopholes and techniques designed to manipulate taxable income to continue indefinitely. Democrats need to take action now, while we have the opportunity, to pass a much more comprehensive and detailed tax bill that will fund the climate change initiatives we need today.

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Byrnes: Given our current economic climate, we need to focus on supporting businesses, continuing job growth and taking measures to combat inflation. Tax hikes on successful business owners are the last thing we need, and this bill avoids the most egregious of the proposals that Democrats had initially proposed in Congress.

Bloink: We’re at a point where we really need to focus on what the majority of Americans need, rather than capitulate to what one lone member of Congress has decided he can support. By agreeing to this scaled-back legislation, Congress and the president are essentially going back on campaign promises simply because one congressman wants to hold Congress hostage and force his own version of the bill into play.

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Byrnes: Spending billions on social programs isn’t going to lower costs for the American public. People are suffering the effects of sky-high gas prices and dramatically higher costs on food and other basic goods. This legislation focuses on deficit reduction rather than tax increases for the successful Americans who invest and keep our economy moving. While tax hikes on big businesses aren’t going to have the effect that Democrats intend, at least this bill refrains from punishing the Americans whose hard work supports our economic growth.

Bloink: This legislation leaves out so many of the important provisions that Americans need right now. We’re facing labor shortages partially because Americans can’t afford the child care that will take them back to work. The new law completely ignores those needs by failing to address the expiration of advance child tax credit provisions and the need for paid family leave. Inflation isn’t happening in a vacuum and we must use this law to address the interrelated issues if we expect a solution.


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