Inflation Reduction Act Will Increase Middle-Class and Small Businesses Taxes: Tax Law Expert

Preston Brashers, a senior tax policy analyst at the right-leaning Heritage Foundation, told the Epoch Times in an interview that despite Democrats’ insistent claims that the Inflation Reduction Act will not raise taxes on people making less than $400,000 a year, collateral effects from the bill will cause workers and small businesses alike to pay more.

The bill, hammered out as a compromise agreement between moderate Sen. Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer (D-N.Y.), serves to fulfill a series of broad Democrat aspirations: increasing federal revenue by closing so-called tax “loopholes,” climate change policies, expansion of the Affordable Care Act, commonly known as “Obamacare,” and reducing prescription drug prices.

The act, according to its supporters, will also help to slow the growth of the ballooning U.S. national debt by decreasing the deficit.

Though it authorizes around $433 billion in new spending, Democrats’ internal estimates suggest that the bill will bring in around $725 billion in new revenue to the federal government, thus reducing the federal deficit and slowing the growth of national debt. Specifically, Democrats estimate that the bill will reduce the deficit by around $292 billion annually.

Importantly, Brashers noted, the bill will not directly increase taxes on individuals at any income level. The most substantial change in the bill will be a modification of corporate taxes, setting a mandatory minimum rate of 15 percent on corporations making more than $1 billion annually.

“There’s nothing in here specifically targeting income levels,” Brashers said. “They’re not targeting people making $400,000 or more.”

Neither, Brashers said, are they targeting businesses necessarily: “A brand can’t pay a tax. Technically, legally, the corporations are the ones paying taxes, but ultimately that has to be paid by people, one way or the other. It’s not like Jeff Bezos—if you tax Amazon—that this is coming

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