Build Back Better Never Something.

• Author: McDonald, Galen
• Position: FEDERAL UPDATE

Let's talk about the Inflation Reduction Act of 2022 [IRA]. It may not be the original Build Back Better Act that the current administration set out to enact, but it is something. This article explains what's in the law and what it means for your jurisdiction.

What is the IRA?

The IRA was signed into law on August 16,2022, and according to the White House, it "will lower costs for families, combat the climate crisis, reduce the deficit, and finally ask the largest corporations to pay their fair share." The IRA is a reduced and revised version of the Build Back Better Act, or the climate and health bill.

The IRA focuses on three key areas: healthcare, clean energy, and taxes.

This article will discuss each of these areas, touching briefly on healthcare and taxes before diving deeper into clean energy. We'll finish off by providing some suggestions and further resources.

Healthcare under the IRA The act aims to cut prescription drug costs and lower healthcare costs, which may in turn lower healthcare costs for employers. The act allows Medicare to directly negotiate for prescription drug prices in 2023. It creates a cap on Medicare patients' out-of-pocket costs, provides cost-free vaccines for seniors, and more.

Taxes under the IRA

Deficit reduction, clean energy, and climate investments are key priorities, and the act contains four primary tax-related instruments for raising money to meet these priorities.

The act will raise $222 billion through "a corporate alternative minimum tax on corporations that earn more than $1 billion in annual profit, but do not pay at least a 15 percent tax rate." Approximately $203 billion will come from "investing $80 billion over the next ten years for tax enforcement and compliance" under the IRS. This corporate minimum tax would have a direct but minimal impact on the demand for municipal bonds, as the affected corporations don't generally invest in munis.

A1 percent fee "on stock buybacks by publicly traded corporations" will raise $74 billion. Finally, $52 billion will be raised "by extending the limitation on excess business losses for two years."

The act also reinstates the Superfund tax, which will raise more than $ 11 billion for Superfund cleanups. The act also includes tax credits to promote clean energy and the environment. Another tax credit will "make used clean vehicles affordable" for those with low and moderate incomes. The existing Investment Tax Credit and Production Tax Credits for renewable...