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Breaking Down The Inflation Reduction Act

The Inflation Reduction Act passed by the Senate on Sunday, August 7, was passed by the House of Representatives on Friday, August 12. The bill is expected to head to President Biden early next week for his signature into law. Previously known as the Build Back Better Act, the Inflation Reduction Act helps working people by addressing health care costs and climate change and paying for it by requiring corporations and wealthy Americans to pay their fair share. Despite tales of misinformation, the bill keeps President Biden’s pledge that no family or business earning less than $400,000 will pay more in taxes as a result of the bill.

About the act, AFL-CIO President Liz Shuler said: ”The effects of this legislation will improve the lives of millions of Americans struggling to afford health care, seniors trying to pay for their prescriptions and future generations who will be able to see the impacts of drastically reduced carbon emissions.”

Critical in developing and passing the bill are Oregon’s Senators Ron Wyden and Jeff Merkley. Wyden first introduced his Clean Energy for America Act in 2015, in which he revised the tax code to incentivize emissions reductions. The new bill builds on Wyden’s earlier bill and will reduce greenhouse gas emissions by 40% by 2030. “This historic clean energy package has been a decade in the making,” said Wyden. “This is among the most consequential bills of my service in the Senate,” he added. Wyden has held office since first elected in 1996 and serves as the chair of the Senate Finance Committee.

In addition to the bill’s historic investment in the environment, it also reforms the tax code. Merkley praised the bill for being “paid for by ensuring billionaires and big corporations pay their fair share in taxes.” For one, it adds a 15% minimum corporate tax for corporations whose profits exceed $1 billion, which is expected to earn more than $1 billion in annual profits. The bill also invests in IRS enforcement to the tune of $80 billion. This provision is expected to increase IRS collections by $203 billion. At the same time, it also provides tax incentives to individuals who “go green.” One incentive is a 10-year consumer tax credit for utilizing renewable energy such as wind and solar. There are also tax credits for buying electric vehicles, both new and used.

Addressing health care costs is another cornerstone of the bill. The bill would allow Medicare to negotiate prescription drug prices, raising $288 billion in revenue. It also includes a $2,000 out-of-pocket cap for seniors buying prescriptions from pharmacies. Insulin prices would be capped at $35 for Americans on Medicare. The bill originally extended the cap on insulin to Americans with private health insurance, but Republicans stripped it from the final bill saying it was out of line with Senate budget rules. But the bill will extend the tax credits for people with Affordable Care Act marketplace coverage provided by the American Rescue Plan Act. Without this new bill, the policy would expire at the end of 2022.

There are a few things in the bill that affect Oregon and haven’t gotten as much attention as some of the other provisions:

  • More than $20 billion for farmers and ranchers to support climate-smart agriculture practices

  • $14 billion for rural electric cooperatives in the state and country to make the transition to cleaner energy

  • $5 billion to protect communities from wildfires by investing in projects on public and private lands, increase carbon sequestration, and reforestation

  • More than $4 billion for drought mitigation

  • $3 billion to EPA for grants to reduce air pollution at ports, which could benefit Oregon’s 23 ports.

“With temperatures today throughout Oregon near or topping 100 degrees, these investments in wildfire prevention, drought mitigation, and supporting our state’s farmers and ranchers are timely and welcome news to fight the devastating impacts of the climate crisis in our state,” Wyden said.

The Oregon labor movement applauds the passage of this bill, and we look forward to seeing President Biden sign it into law. This kind of legislation is exactly what building back better looks like. Passing policies designed to help working people and families should be the main priority of elected leaders in Washington DC and we are grateful to have two senators who advocate for us.

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