Last week, Congressional leadership announced an agreement on the Inflation Reduction Act of 2022 (IRA). The Senate passed the IRA on Sunday and the House is expected to vote on the legislative package today — if passed, the IRA would reduce inflationary pressure on our economy, trigger the nation’s largest-ever investments in climate action, expand health care coverage, and lower prescription drug prices. The best part? It pays for all this without raising taxes on small businesses or families making $400,000 or less.
The IRA raises nearly $740 billion by collecting taxes from America’s wealthiest households and largest corporations and renegotiating prescription drug prices. Last year, Business Forward published an issue brief, Closing America’s Tax Gap, explaining how big of a revenue-raising opportunity it is to collect unpaid taxes — roughly $600 billion of taxes go unpaid each year, and the top 1% of households alone are responsible for 28% of that, nearly $170 billion. Closing the tax gap is not about asking Americans to pay more: it’s about getting the wealthiest taxpayers to pay what they owe.
The IRA was designed to capitalize on this opportunity. It raises $124 billion by simply giving the IRS enough resources to collect a portion of these unpaid taxes. It specifically instructs the IRS to focus on the high-income filers and corporations that cheat the most. In addition, the IRA raises more than $600 billion by implementing a 15% corporate minimum tax and reforming prescription drug pricing. The IRA is designed to level the playing field for small businesses and families.
Learn more about the business case for the Inflation Reduction Act: