The Inflation Reduction Act (IRA) of 2022 and How It Will Affect Your Business

AUSTIN, Texas - Aug. 30, 2022 - PRLog -- After a year of high-stakes negotiation and last-minute reversals, Congress eked out a bill through the evenly divided Senate (with VP Harris breaking the tie) before sending the final legislation, dubbed the Reduce Inflation Act of 2022, to President Biden, who signed it into law this week.

The Inflation Reduction Act Of 2022 Seeks To Reduce The Federal Deficit (And Tame Inflation)

The Inflation Reduction Act of 2022 (IRA) began its tortured journey through Congress first as the Green New Deal and later the Build Back Better Act – a massive spending proposal that flamed out multiple times after Democratic Senators Manchin (WV) and Sinema (AZ) pulled their support due to concerns over inflation and increased deficits.

But as the midterm elections approach, a last-minute budget reconciliation deal was consummated.

Unlike its predecessors, the scaled-down IRA reduces the Federal deficit significantly – a requirement for budget reconciliation bills that bypass the filibuster.

According to the bi-partisan Committee for a Responsible Federal Budget, the Inflation Reduction Act would trim the deficit by $330 billion between 2023 and 2031, and over a longer timeframe, would save $1.9 trillion (between 2023 and 2042).

The IRA accomplishes this through a combination of $900 billion in new spending, $2.4 trillion in offset savings, and $400 billion in interest savings.

The bill's proponents claim that significantly reducing the Federal deficit over time will help reduce inflation, although most of the savings come in the period between 2031 and 2042.

Carbon Pricing Is Out, Tax Credit Incentives To Avert Climate Change Are In

After reducing the deficit (and hopefully helping to tame inflation over the long term), the second major thrust of the IRA is to reduce US greenhouse gas emissions through targeted tax credits, hopefully helping us meet our international commitments at the Paris Climate Accords, which seeks to limit global warming to below 2 degrees Celsius.

The introduction of the IRA's tax credit incentives marks a major strategic shift away from carbon pricing and cap-and-trade policies that have long been considered by Congress (and many economists) for decades as the preferred "free market" approach to reducing greenhouse gas emissions.

What's the projected cost? The new tax incentives intended to help speed up the transition to a cleaner green economy will cost $369 billion.

But will it deliver the goods?

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