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Politics Biden has signed the Inflation Reduction Act. Here’s MarketWatch’s rundown of how it will affect your energy bills, investments and drug costs.

16:21  17 august  2022
16:21  17 august  2022 Source:   marketwatch.com

House to pass Biden's $370 Inflation Reduction Act TODAY

  House to pass Biden's $370 Inflation Reduction Act TODAY The House of Representatives is expected to pass President Joe Biden's sweeping $370 billion Inflation Reduction Act Friday. The legislation - which passed the Senate with only Democratic votes on Sunday - aims to reduce the price of prescription drugs and health insurance and includes a number of green energy initiatives, two major pillars of Biden's original Build Back Better plan. It installs a 15 percent minimum tax rate on corporations, raising enough funds to also pay down the deficit. House Republicans are expected to reject the measure en masse.

  Biden has signed the Inflation Reduction Act. Here’s MarketWatch’s rundown of how it will affect your energy bills, investments and drug costs. © AFP via Getty Images
WASHINGTON WATCH

President Joe Biden on Tuesday signed into law the Inflation Reduction Act — the Democrats’ big economic package aimed at addressing climate change, capping drug costs and raising hundreds of billions of dollars through taxes on corporations.

At a White House ceremony, Biden called the law — which no Republicans voted for — a measure “not just about today. It’s about tomorrow.”

Here’s a guide to key components of the sprawling legislation, as reported by MarketWatch journalists.

Energy and climate: The law contains a number of consumer-focused rebates and tax credits that could directly impact Americans’ wallets.

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Here, for example, is how the IRA’s rebates and credits for heat pumps and solar can lower your energy bill.

And if you’re thinking about buying an electric vehicle the IRA includes the first-ever credit for used EVs, as well as a $7,500 credit for new EVs.

Read more: Climate portion of IRA would keep U.S. ‘within striking distance’ of halving emissions by 2030

The measure is seen as a major effort toward increasing access to EVs across income levels and using them for multiple purposes. Here’s how to navigate the tight market for pre-owned electric vehicles like the Nissan Leaf and Chevy Volt.

Healthcare: Medicare will be allowed to negotiate the costs of some prescription drugs with pharmaceutical companies, which could dramatically reduce how much seniors have to spend on medications.

Here’s what’s in the Inflation Reduction Act, the sweeping bill impacting health, climate and taxes

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Chief executives of pharmaceutical companies, meanwhile, have told investors that the changes would be “chilling” or “detrimental” to the development of new therapies.

Now read: Drug savings in new law aren’t just for seniors

The IRA caps out-of-pocket drug costs for Medicare beneficiaries at $2,000 a year, beginning in 2025. It also imposes a $35-a-month cap on insulin purchased through Medicare — but that cap doesn’t extend to patients on private insurance.

Opinion: No, Senate inflation bill isn’t stripping $300 billion from Medicare

The law Biden signed will also spare 13 million people who get federal subsidies under the Affordable Care Act from higher health-insurance premiums next year. Those subsidies will now be extended for three years.

Taxes: There are two big corporate tax elements of the package: a 15% corporate minimum tax aimed at companies like Amazon that pay little or no income taxes and a 1% excise tax on stock buybacks.

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The 1% tax on share buybacks is seen as unlikely to dull the appeal of share repurchases by many large companies, while other results may be tougher to see, like the potential bottom-line drag from the new minimum 15% corporate tax rate.

Goldman Sachs analysts have said the minimum tax and buybacks would decrease S&P earnings per share by 1.5% on the whole, but the declines could be deeper in sectors such as healthcare and information technology.

The Internal Revenue Service will receive $80 billion in new funding over a decade. But some tax experts have wondered how far the money will go toward making a difference at the backlogged and beleaguered agency.

In a late twist as the bill was being voted on in the Senate, private-equity firms escaped facing tens of billions of dollars in potential tax increases and instead walked away with relief from the new 15% corporate minimum tax.

There are no changes to the $10,000 cap on state and local tax deductions.

Inflation and deficits: Whether the law will live up to its name is a subject of fierce debate. In an analysis released Friday, the Penn Wharton Budget Model found the measure would reduce deficits by $264 billion over a decade. The same study concluded that the impact on inflation is “statistically indistinguishable from zero.”

Others, including former Treasury Secretary Larry Summers, see the IRA doing its job.

“The tendency of this bill will be to reduce inflation, because over time it reduces demand by bringing down budget deficits,” Summers, critical through much of the past year of his fellow Democrats’ approach to arresting inflationary pressures. told the Harvard Gazette.

For Republican governors, all economic success is local .
WASHINGTON (AP) — Gov. Greg Abbott, R-Texas, often knocks President Joe Biden for high inflation and a looming recession — a standard GOP argument going into the November elections. But inflation is even worse in major Texas cities than across the nation as a whole. Government figures show inflation is 10.2% in the Houston area and 9.4% around Dallas, higher than the latest national average of 8.5%. Abbott and other GOP leaders are making a paradoxical argument that the U.S. economy has slumped into a recession, but Republican-led parts of the country are still booming.

usr: 2
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