Washington, Aug 17: US President Joe Biden has signed a $700 billion bill that aims to fight climate change and healthcare costs while raising taxes mainly on the rich, likely providing him with the much-needed boost ahead of mid-term polls.
The act includes measures to curb the price of prescription drugs. The final version is a much modest version of the $3.5 trillion package first envisaged by Democrats. The President hailed the bill as he signed it on Tuesday as the “final piece” of his domestic agenda.
The package invests $375 billion to fight climate change — a historic federal investment. The bill does not require companies to reduce their emissions, but includes tax incentives for firms to invest in renewable energy and rebates for people who buy electric cars or invest in energy-efficient home improvements.
The bill also allows the government to negotiate lower prices for some prescription medicines provided under its medicare health insurance programme for those aged over 65. It is expected to save hundreds of billions of dollars over the next decade, according to estimates from the nonpartisan Congressional Budget Office.
Key economic claims about the legislation have been under scrutiny, the BBC said. According to economic experts, despite being called the Inflation Reduction Act (IRA), the package will have zero measurable impact on inflation. The bill sets a minimum 15 per cent tax for corporations, and Democrats have pledged it will entail no tax hikes for those with incomes below $400,000 a year.
But an analysis of the legislation by the Congressional Budget Office said Americans earning less than $400,000 a year would end up paying an additional $20 billion in taxes, the BBC report said. While the climate spending is unprecedented, many of its changes will not go into effect for at least two more years, leaving questions about how the new programmes will work.
The tax credit for electric vehicles, for example, comes with price caps that disqualify nearly every option currently on the market, according to the car industry. Several ambitious proposals were scrapped from the bill in the final weeks, including closing a tax loophole for private equity firms and capping the price of the diabetes medicine insulin.