The Inflation Reduction Act is moving forward after winning support from Arizona Sen. Kyrsten Sinema, the remaining Democrat who opposed the legislation.
Sen. Sinema negotiated to remove a tax provision that would have affected the carried interest loophole, which allows hedge fund managers and private equity partners to be taxed at a lower rate than most Americans workers. Sen. Sinema also got Democrats to change provisions that affect how companies can write off depreciated assets, reported CNN.
Senate Democrats spent months negotiating with Sen. Joe Manchin, Democrat from West Virginia, to reach an agreement on the bill. Having cleared the last major hurdle—Sen. Sinema’s approval—it will likely head to the Senate floor for a vote.
What will the Inflation Reduction Act do?
The Inflation Reduction Act has two main goals: Lower health care costs, and invest in domestic energy production to curb the effects of climate change.
The act will:
Make a down payment on deficit reduction to fight inflation.
Invest in domestic energy production and manufacturing.
Reduce carbon emissions by around 40% by 2030.
Allow medicare to negotiate for lower prices for prescription drugs.
Expand the Affordable Care Act Program through 2025.
This act will allow Medicare to negotiate some prescription drug prices, and set a spending cap of $2,000 annually. The bill will also lower health care premiums for the 13 million Americans insured through the Affordable Care Act for the next three years. Lawmakers claim beneficiaries will save an average of $800 annually.
This bill will offer American families tax rebates to buy energy-efficient appliances, as well as tax credits for electric or fuel cell vehicles of up to $7,500 if the vehicle was made in the U.S.
The White House says tax credits will also be available for people who work in clean energy projects, which “will create thousands of good paying jobs — manufacturing jobs on clean energy construction projects, carbon capture projects, and more.”
Who is paying for all of this?
A new bill with the latest changes will be introduced tomorrow. Originally, the act proposed spending $739 billion over the next 10 years: around $300 billion for a government spending deficit reduction, $369 billion for clean energy and climate change programs, and $69 billion for the Affordable Care Act extension.
The bill will likely have revisions for raising funds. The initial bill proposed a 15% minimum corporate tax, which a committee on taxation estimated would contribute about $313 billion. Other funds will include $288 billion from prescription drug pricing reform. To make up for the latest changes, it will reportedly include a 1% increase on excise tax on stock buybacks by publicly-traded companies.
Will the bill become law?
The bill still has to be approved by the House. Some moderate House members could oppose ask for more revisions to tax provisions.
It will be scheduled for a vote in the Senate on Saturday, pending a review by Parliamentarian Elizabeth MacDonough. Without Republican support, all 50 Democrats, along with Vice President Kamala Harris, will need to vote in favor.
This story has been updated to reflect latest developments. It was originally published July 29.