Maine Center for Economic Policy (MECEP) applauds the proposed “Inflation Reduction Act” recently announced by US Senators Chuck Schumer and Joe Manchin and urges Maine’s Congressional delegation to support the bill. The act contains a number of provisions which will reduce the cost of living for Mainers over both the short- and long-term, while improving the fairness of our tax code and facilitating the transition to a clean energy future.
“Right now, Mainers with low income are struggling with expenses like health care, gas, and heating oil while wealthy corporations are recording record profits,” said MECEP Economic Policy Analyst James Myall. “This proposal will confront rising costs by closing tax loopholes abused by wealthy households and corporations and putting that money toward helping everyday workers and families make ends meet.”
In particular, MECEP welcomes several provisions in the proposal which will make the US tax code fairer:
- Creating a minimum corporate tax rate of 15 percent, ending the ability of powerful corporations to make billions of dollars in profits while using deductions and loopholes to pay next to no federal income tax.
- Properly funding the Internal Revenue Service for the first time in decades, giving the agency the resources to go after wealthy tax evaders instead of its current practice of focusing on single parents with low income. Investigations have found that Piscataquis and Washington Counties in Maine are among the highest-audited counties in the nation due to this underfunding. Properly funding the IRS will turn their focus back to the wealthy 1 percent.
- Closing the “carried interest” loophole, which allows hedge fund managers to avoid income taxes by being paid in future earnings on the shares they manage, instead of a regular paycheck.
Additionally, the bill’s health care proposals will make it more affordable for tens of thousands of Mainers to get the care they need:
- Extending the subsidies included in the American Rescue Plan for 66,000 Mainers who currently get their insurance through the “health care marketplace.” MECEP previously estimated that without this continuation, some Mainers would face up to $20,000 a year in extra premium costs.
- Allowing Medicare to negotiate lower prices for prescription drugs and capping out-of-pocket costs for people enrolled in Medicare Part D plans. This would directly reduce costs for tens of thousands of older Mainers with low income.
Furthermore, the bill would create a historic level of investment in provisions to tackle the climate crisis, with tax credits to make technology like heat pumps, solar panels, and electric vehicles more affordable for consumers, as well as funding to help make older homes more energy efficient. It also invests heavily in manufacturing and developing new technologies in the US. Altogether, these are estimated to reduce US carbon dioxide emissions by 40 percent over the next decade. We know that tackling the climate crisis is especially important to communities with low income who will be the most vulnerable to its impacts. In the near term, the Act will be especially meaningful for Mainers who are currently some of the most vulnerable Americans to high costs of heating oil and electricity.