June 26, 2024 — Editor’s note: Due to unforeseen circumstances, the June and July/August Retiree columns are here combined.
In my May column, I wrote about issues-based support and doing our research on candidates before we blindly cast our vote. In this month’s article, I’ve focused on a piece of legislation that many of you may not be familiar with, the Inflation Reduction Act (IRA), which will have a tremendous influence on our economy and quality of life. As you already know, what happens in Washington and Albany has a major impact on our lives!
The IRA creates millions of new clean energy jobs, makes prescription drugs more affordable, and asks the ultra-wealthy and large corporations to pay their fair share in taxes. Signed into law by President Joe Biden on Aug. 16, 2022, the bill is a $500 billion investment that includes benefits for everyday Americans.
Below is information I’ve found helpful in understanding the IRA and its impact:
Clean energy and climate
The IRA fights the climate crisis through historic investments in clean energy, energy efficient buildings, and resilient communities. The almost $400 billion in funding is administered through a mix of tax incentives, grants, and loan guarantees meant to lower carbon emissions 40% by 2030.
The majority of the IRA’s funding is intended to transform the economy and communities by bolstering the clean energy sector and creating more than six million new jobs. This funding includes $216 billion in tax credits to incentivize investment in clean energy, including in wind and solar power, electric vehicles, clean energy supply chains, and transmission infrastructure.
To take full advantage of the tax credit, businesses and other eligible entities must meet labor and equity standards, as well as requirements that most of the labor and materials used are from the United States. There are additional benefits for investing in communities that have been disproportionately impacted by pollution and unlike other existing tax credits, states, local governments, and nonprofits can take advantage of these clean energy programs.
There are also tax credits for individuals for the purchase of electric vehicles, providing up to $7,500 for new vehicles and up to $4,000 for used vehicles. These credits are payable at the time of purchase and aimed at making electric vehicles more affordable.
Energy Efficient Buildings
The IRA offers a combination of grants and tax credits aimed at constructing new buildings and retrofitting existing ones to be energy efficient and climate resilient. Various initiatives to address the energy efficiency of residential, commercial, and public buildings, would create 900,000 new jobs.
These initiatives include:
- Tax credits for residential homeowners and tenants to be reimbursed up to 30% of the cost of eligible home improvement investments like energy efficient appliances, rooftop solar panels, geothermal heating, and home batteries.
- Tax credits for commercial building owners who install systems in their buildings that reduce energy usage by 25%.
- $1 billion available in loans and grants to improve the energy efficiency and climate resiliency of affordable housing.
- $250 million in grants to upgrade federal buildings into green buildings.
Resilient Communities
The IRA also makes a $120 billion investment in grants for communities, while creating another half a million new jobs. These investments include:
- Conservation programs like restoring coastal habitats and supporting forests;
- Resilience programs that reduce pollution in schools and support local governments in climate change planning and response;
- Environmental justice programs that ensure as we invest in all communities, those that have been historically marginalized and disproportionately impacted by climate change are not left behind.
Affordable Health Care
The IRA addresses the sky-rocketing cost of health care, ensuring that families and seniors pay less. It is estimated that these provisions will save the federal government $173 billion through 2031.
Medicare Takes on Big Pharma
The majority of the IRA’s healthcare provisions are drug price reforms that reduce costs for millions of Medicare beneficiaries, including:
- Requiring Medicare to negotiate with pharma companies on the prices of certain high-cost drugs to use its purchasing power to bring down the cost of prescription drugs.
- Preventing drug companies from price gouging by penalizing them for raising drug prices faster than the rate of inflation. This resulted in individuals saving on the cost of 43 different prescription drugs, just in the third quarter of last year, from July 1-Sept. 30, 2023.
- Establishing a $35 co-pay cap on insulin.
- Capping out-of-pocket expenses for Medicare Part D prescription drugs at $2,000 annually, starting in 2025.
- Offering free vaccines as of January 2023.
Expanding the Affordable Care Act
The law also makes health insurance more affordable, so that millions more Americans will be able to get coverage. By extending Affordable Care Act subsidies through the end of 2025, not only will millions of families save money when buying insurance through the marketplace, but families who buy their insurance on their own will have their insurance premiums reduced by up to $800.
Tax Fairness
The IRA enacts new taxes to fund the investments made, while ensuring that the ultra-wealthy and large corporations pay their fair share. It increases the minimum tax on large corporations to 15% and limits the deductions that wealthy business owners are able to use to avoid paying taxes on their full income.
The IRA originally increased funding for the IRS by $80 billion over the next 10 years so the agency is equipped to go after wealthy tax cheats, but the recently passed debt ceiling bill rescinded $1.4 billion in funding and diverted an additional $20 billion to other programs. Despite this, we already saw the IRS improve customer service and step up enforcement on the ultra-wealthy during the 2023 tax season.
To provide you with this updated information I’ve researched the IRA and presented you with these highlights, with links to supporting information. I hope you take time to educate yourself about issues important to all of us as Americans, union members and retirees!
In Solidarity,
Jim Carr