Inflation Reduction Act of 2022

[MarieIG]

P.S. I don't like the expression "closing loopholes." I would prefer a precise explanation of the change(s). I heard on tv it was eliminating the ability of (certain?) entities to take their appreciation upfront. (Again . . . "fuzzy")

 

[MarieIG]

Just asking - why should prescription drug price reform to lower prices, including Medicare negotiation of drug prices cost taxpayers (other than the drug manufacturers) $288 billion?

Not against negotiating drug prices, just think it can be done much more cheaply.

Also suspect that corporations will pass the tax directly through to the consumers. I don't think that provision will serve to reduce inflation.

 

[REWahoo]

Footnotes 2 and 3 are worthy of close study before drawing any conclusions.

+1

As usual, the devil is in the details - and this particular analysis has many, many details.

 

[intent]

Is the below correct? I am finding conflicting information as to whether there will be an increase in taxes on individuals.


In 2023, the year in which the legislation would increase tax revenue most, individuals making less than $10,000 per year would pay 3.1% more in taxes and those making between $20,000-30,000 per year would see a 1.1% tax increase, the JCT analysis showed. Tax revenue collected from those making $100,000 per year or less would increase by $5.8 billion in 2023 under the Inflation Reduction Act.

I'm not smart enough to know whether to classify that information as correct or not, but I found this article that looks like it tries to provide a bit of explanation as to what the JCT analysis means: https://nymag.com/intelligencer/202...00000-campaign-promise-corporations-rich.html

 

[all4j]

P.S. I don't like the expression "closing loopholes." I would prefer a precise explanation of the change(s). I heard on tv it was eliminating the ability of (certain?) entities to take their appreciation upfront. (Again . . . "fuzzy")

I think the loophole terminology is aimed at a provision to change "carried interest" -- not eliminate it, but reduce it. The impact isn't huge in terms of $s, but has been a sore spot with some for a while. Basically, carried interest is an approach in which some investment managers (think private equity, etc) get some of their compensation as long term cap gains instead of ordinary income. Depends on who you ask as to whether it is or isn't I guess.

There is actually more supposedly that will come from adding funding to IRS to catch more "cheaters" & that is also seen by some as taking advantage of loophole and/or questionable as to whether it'll increase revenue

 

[Ronstar]

I like the bill - if it meets the revenue $ projected from sources per the bill, and if the bill does reduce the deficit by their projections, and if the bill provides domestic energy security.

It seems like the only parts of the revenue stream that are for certain are the increased (and enforced) taxes of $451b. I question how long it would take to generate $ $228b in drug price reform, if it's even possible.

I just don't understand how the bill is not inflationary. I'm fairly certain that those companies being taxed are going to increase the cost of their goods and services to meet the additional tax burden.

 

[aaronc879]

Just asking - why should prescription drug price reform to lower prices, including Medicare negotiation of drug prices cost taxpayers (other than the drug manufacturers) $288 billion?

Does it say price reform is costing $288 million or is the total bill related to Medicare costing $288 million? I think the cap on out of pocket drug costs is what will cost the most money to tax payers.

 

[harllee]

My understanding is that the drug negotiations would not affect those with part d & advantage plans. It would start in 2026 with 10 of the "highest SPEND" drugs, then up to 20 over a couple of years after that. I'm assuming that was negotiated and/or what it took to get budget $s they were looking for. There are also some provisions capping spend for the year, copays, etc

BTW, I recently saw in Wall Street Journal something about prescription drugs & inflation. I forgot the numbers, maybe someone else will chime in. But basically they were going up less than most items (from an inflation point of view)

The #1 drug by amount spent the US is Humira, the injectable drug taken by my DH for psoriatic arthritis. It is also taken by folks with Chrons, rheumatoid arthritis and many other autoimmune diseases. The cost is astronomical--around $3000 per shot and most people have to take it weekly or every 2 weeks. The manufacturer of the drug has been able to get its patent extended and has been able to prevent generics. It is my guess that Humira and other similar drugs will be the first drugs for which there are negotiations. It is my understanding that the negotiated price would apply to Medicare Part D and Advantage plans.

 

[MarieIG]

Not certain but this may be it.https://www.finance.senate.gov/imo/media/doc/jct_distributional_effects_inflation_reduction_act.pdf

Footnotes 2 and 3 are worthy of close study before drawing any conclusions.

The press releases don't seem to be mentioning that . . .

 

[copyright1997reloaded]

The #1 drug by amount spent the US is Humira, the injectable drug taken by my DH for psoriatic arthritis. It is also taken by folks with Chrons, rheumatoid arthritis and many other autoimmune diseases. The cost is astronomical--around $3000 per shot and most people have to take it weekly or every 2 weeks. The manufacturer of the drug has been able to get its patent extended and has been able to prevent generics. It is my guess that Humira and other similar drugs will be the first drugs for which there are negotiations. It is my understanding that the negotiated price would apply to Medicare Part D and Advantage plans.

Humira is coming off patent in the USA in 2022. Amgen is expected to have the first copycat drug (BioSimilar) in January 2023, with up to eight others by the end of 2023.

Abbvie's patent in Europe expired in 2018, and there are now four (perhaps more) BioSimilar's being sold.

 

[harllee]

Humira is coming off patent in the USA in 2022. Amgen is expected to have the first copycat drug (BioSimilar) in January 2023, with up to eight others by the end of 2023.

Abbvie's patent in Europe expired in 2018, and there are now four (perhaps more) BioSimilar's being sold.

Yes, I have read that and certainly hope that DH is able to take the bio similar and that the price is substantially less than the outrageous cost of Humira.

 

[Beststash]

From what I have heard Medicare will be able to negotiate on a handful of drugs, with those new prices taking effect in 2026. In 2026, Medicare will only be able to address costs for 10 drugs; over time, that will increase to 20 drugs. The drugs in question will be determined based on a slew of criteria, including how expensive they are.

IMO, like the VA, all drugs should be negotiated. There is no reason not other than the PHARMA lobby.

I like the Climate Change portion of the bill. Hopefully not too little too late.

I also like the 15 percent minimum tax on corporations with profits over $1 billion. Yet to be seen what the reality of that will be after the accountants get a hold of that.

I also like the ACA subsidies. It will help people like myself who retired early without a health insurance option. Too late for me but hopefully other will fare better.

All in all I like the sound of it but will reserve approval till after/if it passes.

 

[Texas Proud]

I think the loophole terminology is aimed at a provision to change "carried interest" -- not eliminate it, but reduce it. The impact isn't huge in terms of $s, but has been a sore spot with some for a while. Basically, carried interest is an approach in which some investment managers (think private equity, etc) get some of their compensation as long term cap gains instead of ordinary income. Depends on who you ask as to whether it is or isn't I guess.

There is actually more supposedly that will come from adding funding to IRS to catch more "cheaters" & that is also seen by some as taking advantage of loophole and/or questionable as to whether it'll increase revenue

I have not read the bill, but hope they did not tweek the carried interest but eliminated it altogether.... there is NO reason that the money manager should be able to pay a lower tax rate on their earned income...


To me the logic behind it was flawed and whomever let it go this way must have been paid off...

 

[Taco]

It seems like the only parts of the revenue stream that are for certain are the increased (and enforced) taxes of $451b. I question how long it would take to generate $ $228b in drug price reform, if it's even possible.

I think 'certain' is perhaps too strong of a word for that $451b.

For example, the $124b revenue from increased tax enforcement starts by sending an extra $80b to the IRS. It is not all to enhance enforcement - almost half is just to improve operations (which they desperately need!).

Given the $80b cost, it will take over $200b in extra enforcement-based revenue to generate the guesstimated $124 of extra revenue. But who really knows how much revenue will be gained from enhanced enforcement?

If they end up with an extra $60b in revenue, then this measure actually costs $20b rather than raising $124b.

Note that the numbers above (~$200b extra revenue) are from the Congressional Budget Office. The Office of Management and Budget projected $320 billion in extra revenue. I saw a CNN article from last year said the administration forecast $700 billion in extra revenue (when this same idea was part of a previous bill). It seems to me these are all just wild guesses, because it is an impossible thing to know.

 

[EastWest Gal]

My understanding is that the drug negotiations would not affect those with part d & advantage plans. It would start in 2026 with 10 of the "highest SPEND" drugs, then up to 20 over a couple of years after that. I'm assuming that was negotiated and/or what it took to get budget $s they were looking for. There are also some provisions capping spend for the year, copays, etc

BTW, I recently saw in Wall Street Journal something about prescription drugs & inflation. I forgot the numbers, maybe someone else will chime in. But basically they were going up less than most items (from an inflation point of view)

I think you are correct. They're going to go for the most bang for their buck, by negotiating for a few drugs at a time.

 

[Montecfo]

Thanks, Gumby.



In addition to Gumby’s response, I would add the Inflation Reduction Act of 2022 is part of a budget reconciliation process and therefore will not go to committee. It follows a different path. The next step is a Senate resolution, and if it passes with a simple majority vote would become part of the budget bill, and then follow the budget reconcile process.



We could postpone discussion until that happens, but the likelihood of the Senate resolution is much higher than a typical bill, so while this is still speculative it does have a higher probability of seeing daylight, which is one criteria we prefer to discuss pending legislation.

Only if the parliamentarian agrees.

 

[ownyourfuture]

Hopefully I'm just missing something. If not, it looks like many of us here will have to think about this again in 2023.

 

[Montecfo]

The bill certainly has nothing to do with reducing inflation.

It is largely "green" subsidies to people and industries that do not need them, funded by a tax on corporations which will largely hit consumers and cost jobs, according to the nonpartisan Joint Committee on Taxation.

It includes a regressive has tax at a time when has prices are already high (and violating a pledge to not increase taxes on those making less than $400k). And according to analyses (and common sense) it is inflationary.

This congress has certainly become outrageous in how misleading the bill names are. Of course, if they named it honestly it would never pass.

 

[SecondCor521]

As far as I can tell, the Inflation Adjustment Act being discussed in the news has not yet been officially introduced in Congress.

The text of the bill, which one can find through the Wiki article linked in the OP, references HR5376 on the first page or so. Searching for that bill on congress.gov reveals the larger version of Build Back Better which passed the House in November 2021, not the Inflation Reduction Act text.

It's Tuesday evening where I am. Congress is scheduled to start their August recess this Friday, I think. I wonder how many procedural steps are required and how long they take to complete? I suppose they could delay their recess for this bill.

Last I read, Senator Sinema of AZ was wanting to hear from the parliamentarian in order to help determine her vote, and the parliamentarian's evaluation could take a few days.

If it passes the Senate, it would of course also have to pass the House. That could be a formality, or it might not depending on what revised text emerges from the Senate process.

 

[pb4uski]

The bill certainly has nothing to do with reducing inflation.

It is largely "green" subsidies to people and industries that do not need them, funded by a tax on corporations which will largely hit consumers and cost jobs, according to the nonpartisan Joint Committee on Taxation.

It includes a regressive has tax at a time when has prices are already high (and violating a pledge to not increase taxes on those making less than $400k). And according to analyses (and common sense) it is inflationary.

This congress has certainly become outrageous in how misleading the bill names are. Of course, if they named it honestly it would never pass.

Monte,

What specific provisions will increase income taxes for individuals with less than $400k of income?... I have not seen anything in my review of the tax provisions. In fact, the only individual provisions relate to carried interest, which is unlikely to impact households earning less than $400k.

I agree with you that the impact on inflation is probbly marginal even though tax changes exceed proposed spending.

 

[MichaelB]

<mod note> Let’s all focus on the content of the bill and how it affects us, if at all. Disagreements with the rhetoric go nowhere very quickly.

 

[ShokWaveRider]

I think the minimum corporate tax provision is a good one, along with anything that can bolster the ACA. At least for 1 year till DW goes on Medicare.

 

[ERD50]

I think the minimum corporate tax provision is a good one, ....

But how does that in any way reduce inflation (the title of the bill!)?

Those taxes are just costs to the corp, and are just passed on to the consumer. And the consumer will also effectively be paying for the corporations team of lawyers and accountants that are hired to try to reduce the corporate tax hit (with the double whammy that the consumers would need to be taxed more to make up for what the corp managed to *not* pay).

I'd vote for the opposite, reduce corp taxes. Corp taxes are a shell game, and the consumer is the patsy.

-ERD50

 

[ShokWaveRider]

But how does that in any way reduce inflation (the title of the bill!)?

Those taxes are just costs to the corp, and are just passed on to the consumer. And the consumer will also effectively be paying for the corporations team of lawyers and accountants that are hired to try to reduce the corporate tax hit (with the double whammy that the consumers would need to be taxed more to make up for what the corp managed to *not* pay).

I'd vote for the opposite, reduce corp taxes. Corp taxes are a shell game, and the consumer is the patsy.

-ERD50

The title of the act is to appease the populous. Both parties do it all the time. It is called politics.

 

[MichaelB]

But how does that in any way reduce inflation (the title of the bill!)?

Can we please forgo discussions surrounding the rhetoric of the bill and focus on provisions and content?