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Tuesday, August 16, 2022

Republicans grope in the dark against tax

Senate Majority Leader Chuck Schumer speaks on the Inflation Reduction Act in front of the US Capitol on Aug.Drew Anger (AFP)

If Senator Kirsten Cinemas allows it, Democrats appear to be on the verge of passing the Inflation Reduction Act, a bill that would reduce inflation but is primarily a much-needed effort to limit climate change. Republicans, naturally, are attacking this law. But when I look at the essence of these attacks, as they are, I can’t help but feel happier than I have for months.

For starters, the debate on the proposal seems like a return to a more innocent time, when Republicans tried to make their case with dishonest claims about economic policy, not crazy conspiracy theories and attempts to overthrow democracy. . On the other hand, Republican criticism of the bill is very weak. And it bodes well for the new democratic approach to climate policy, one that is based on carrots rather than sticks, on incentives to do the right thing rather than punishments for doing wrong. We are already seeing how difficult it is for Republicans to attack this approach, and it will be even more difficult when the public begins to see the benefits of environmental investing.

Let’s take a look at the reviews. The law provides for $369 billion in climate spending, mostly in tax subsidies for households and businesses that adopt clean energy technologies, improve energy efficiency, and so on. $64 billion will also be spent on expanding subsidies that help keep health insurance affordable. This new expense will be paid for in full, and will be largely spared through the fight against tax evasion and fraud. The biggest source of revenue will be the new minimum tax for large companies. The law would give the severely underfunded Internal Revenue Service (IRS) more resources for tax fraudsters. And it would try to save Medicare money by giving the program the power to negotiate drug prices.

How can Republicans attack such a bill? They cannot openly protect the interests of tax evaders and fraudsters, although their long-term efforts to deprive the IRS of resources show that they are indeed on the side of tax fraud. What they have done instead is claim – citing a presumption by the Joint Congressional Committee on Taxation (JCT), which has no partisan bias – that the legislation will raise taxes on the middle class and that it is one of Joe Biden’s campaign promises. violates.

This is a false statement on many levels. First, the law will not increase one’s personal income tax. place. I just wouldn’t. Instead, the JCT projects what are the “distribution effects”, an attempt to calculate the indirect burden on households as a result of other taxes, which in this case essentially has a potential impact on wages by requiring large companies to pay a minimum amount of taxes. It means. Calculating these effects is useful, but do they mean “tax increases” for workers? Almost any government policy will have an adverse effect on one’s income somewhere; But does the government raise taxes on everything?

Also, if we’re going to consider the indirect effect of a law on households’ income that doesn’t directly affect their taxes, why not consider the whole law and not just part of it? The JCT table notes that it excludes the impact of several important parts of the bill that would help families incentivize them, from lower drug costs and increased health insurance subsidies to clean energy. Add everything up and it is almost certain that the middle class will come out on top.

Another aspect I haven’t emphasized is that the bill would reduce air pollution in general, not just greenhouse gas emissions, which would have significant health benefits, and monetary benefits as well. But wait, there’s more. The JCT begins on the premise that a significant portion of the income received by taxing companies will come from wages. This is a subject of intense academic debate, but there are good reasons to think that, when tax evasion is combated, the impact on wages is actually minimal.

Finally, for all the ways that the JCT’s analysis measures against the Inflation Reduction Act, the alleged middle-class tax hike is negligible. For example, according to the JCT, the federal tax rate for households earning between $50,000 and $75,000 annually will increase from 13% to …13.1%. So the Republican attack on this proposal is, in a word, pathetic. The only way it can gain momentum is if the media chooses to expose “both sides” and the news fails to inform consumers that Republicans’ claims about the bill are, in fact, false. Unfortunately, this is a real possibility. Any news that says “Republicans claim the bill will raise taxes on the middle class” and fails to point out that this claim is false is a betrayal of the public interest.

However, propaganda aside, the right-wing attack on Democrats’ new climate policy is, as I said, weak, and that’s a good thing to see. While the Inflation Reduction Act is great in itself, many of us hope that it is just a down payment on an even bigger effort to save the planet. And if that’s the best that the enemies of the planet can do, that’s great.

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World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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