Lisa Mascaro AP Congressional Correspondent
WASHINGTON (AP) — The largest investment in US history to combat climate change. The upper limit of out-of-pocket prescription drugs for seniors in the Medicare program is an uphill battle. A new minimum corporate tax to ensure large companies pay their share.
And billions of dollars remain to pay off the federal deficit.
Overall, the Democrats’ “inflation-reducing bills” may not do much to curb inflation-driven price increases immediately. But the package, which is headed to the White House for final passage through Congress and President Joe Biden’s signature, is a long-standing party proposal that will affect the lives of countless Americans.
While not as strong as Biden’s original ideas to rebuild America’s public infrastructure and family support system, the compromises in healthcare, climate change and deficit reduction strategies are also a spectacular turning point in an election year. collapsed last year.
Only Democrats support the package, and all Republicans are expected to vote against it. Republicans have ridiculed the 730-page bill, specifically criticizing big government for going overboard, investing her $80 billion in the Internal Revenue Service to hire new employees and go after tax evaders.
Voters will be left to sort it out in the November elections, when control of Congress will be determined.
Here’s what the estimated $740 billion package consists of: $440 billion in new spending and $300 billion in deficit relief, and is set for final approval by the House on Friday.
Reduce prescription drug costs
The bill would allow the Medicare program to negotiate the price of some prescription drugs with pharmaceutical companies, saving the federal government about $288 billion over a 10-year budget window.
The result is expected to reduce drug costs for seniors, including a $2,000 out-of-pocket limit for seniors purchasing prescriptions from pharmacies.
Proceeds raised will also be used to provide free immunizations to the few seniors who are not guaranteed free access, according to summary documents.
For seniors, insulin prices are also capped at $35 per month.
help pay for health insurance
The bill extends subsidies provided during the COVID-19 pandemic to help some Americans purchase their own health insurance.
Additional aid was set to expire this year under previous pandemic relief. However, the bill would allow nearly 13 million people who purchase their own health insurance through the Affordable Care Act to lower their premiums and continue to receive assistance for another three years.
Biggest US investment in climate change ‘by far’
The bill would pour about $375 billion over 10 years into strategies to combat climate change that Democrats believe could put the nation on the path to reducing greenhouse gas emissions by 40% by 2030. become. far. “
For consumers, this means tax rebates for purchasing electric vehicles. He is $4,000 for used car purchases and up to $7,500 for new car purchases, which applies to households earning $300,000 or less for couples, or singles earning $150,000 or less for hers.
Not all electric vehicles are fully tax deductible. This is due to the requirement that components be manufactured and assembled in the United States.
There are also tax breaks for consumers to be environmentally friendly. One is his 10-year consumer tax credit for renewable energy investments in wind and solar.
For businesses, the bill includes $60 billion in clean energy manufacturing tax credits and $30 billion in wind and solar production tax credits to build industries that help reduce the country’s dependence on fossil fuels. Seen as a way to boost and help.
The bill also provides tax credits for nuclear power and carbon capture technologies that oil companies such as ExxonMobil have invested millions of dollars in advancing.
The bill would impose new charges on excess methane emissions from oil and gas drilling, while giving fossil fuel companies access to more leases of federal land and waters.
Additional proposals, later pushed by Arizona Democratic Senator Kirsten Sinema and other Democrats in Arizona, Nevada, and Colorado, included large-scale conservation efforts in the West, including conservation efforts in the Colorado River Basin. was to appoint $4 billion to deal with drought. One million Americans depend on drinking water.
How to pay for all this?
One of the biggest revenue drivers under this measure is a minimum tax rate of 15% for companies with more than $1 billion in annual profits.
It’s a way of cracking down on about 200 US companies avoiding paying the standard 21% corporate tax rate, some of which end up paying no tax at all.
The new minimum corporate tax will begin after tax year 2022 and will raise more than $258 billion over 10 years.
There will also be a new 1% excise tax on stock buybacks, which will raise approximately $74 billion over 10 years.
Savings from allowing Medicare to negotiate with drug companies are expected to bring in $288 billion over 10 years, according to the nonpartisan Congressional Budget Office.
The bill is in line with Biden’s original promise not to raise taxes on families and businesses earning less than $400,000 a year.
But it also raises money by boosting the IRS to pursue tax fraud. The bill proposes his $80 billion investment in taxpayer services, enforcement, and modernization, which is expected to generate $203 billion in new revenue.
extra money to pay the deficit
With about $740 billion in new revenue and about $440 billion in new investment, the bill promises to use the difference of about $300 billion to reduce the deficit.
Federal deficits soared during the COVID-19 pandemic. Tax revenues fell as federal spending surged and the country’s economy was disrupted by shutdowns, office closures and other major changes.
The country has seen deficits rise and fall in recent years. But overall federal budgeting is on an unsustainable path, according to the Congressional Budget Office, which recently released a new report on long-term forecasts.
While the package falls far short of the sweeping Build Back Better program Biden once envisioned, it is still a sizable undertaking, combined with the easing of COVID-19 and the Republican tax cuts of 2017. It is one of the more significant bills introduced by Congress in recent years.
Congress passed, and Biden signed a $1 trillion bipartisan infrastructure bill for highways, broadband, and other investments that was part of the White House’s original vision, but the Democratic Party’s other key priorities were overlooked.
For now, there are no more free pre-kindergarten and community college plans, and America’s first paid family leave program offering up to $4,000 a month for births, deaths and other essential needs. We are also allowed to revoke enhanced child care credits that offered $300 per month during the pandemic.
Associated Press writer Matthew Daly contributed to this report.
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