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Inflation Reduction Act of 2022
Old 08-01-2022, 09:21 AM   #1
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Inflation Reduction Act of 2022

The purpose of this thread is to discuss the Inflation Reduction Act of 2022. Forum ground rules haven’t changed, so please leave the partisan comments at the door, don’t be snarky, and discuss the facts and provisions of the bills as we know them.

From Wikipedia https://en.wikipedia.org/wiki/Inflat...on_Act_of_2022
Quote:
The Inflation Reduction Act of 2022[1][2] is a bill proposed for passage in the 117th United States Congress. A budget reconciliation bill sponsored by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV), it authorizes $370 billion in spending on energy and climate change, $300 billion in deficit reduction, three years of Affordable Care Act subsidies, prescription drug reform, and tax reform.
Quote:
Provisions[edit]
The bill would raise revenue from:[5]

Imposing a 15% corporate minimum tax rate for companies with higher than $1 billion annual revenue – $313 billion
Prescription drug price reform to lower prices, including Medicare negotiation of drug prices – $288 billion
Increased tax enforcement – $124 billion
Narrowing the carried interest loophole – $14 billion[6]
It would spend this revenue on:[5]

Continuing for three more years the expansion of Affordable Care Act subsidies originally expanded under the American Rescue Plan Act of 2021 – $64 billion
Addressing domestic energy security and climate change – $369 billion
Deficit reduction – $306 billion
As part of the investment into energy, the bill would extend the solar investment tax credit for 10 years.[7]
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Old 08-01-2022, 09:36 AM   #2
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For those of you interested in the EV Tax Credit provisions of the draft bill, I found this summary:

Quote:

New Vehicle Credit

1. Manufacturer caps eliminated. (Page 370, line 15)

2. Credit applies for vehicles purchased beginning January 1, 2023. (Page 386, line 1).

3.Transition provision for EVs with written sales orders dated in 2022 prior to the date of President signing the bill but delivered in 2023 allows purchaser to claim the “old” credit in 2023. (Page 386, line 20).

4. Vehicle must be assembled in North America to qualify for new credit. (Page 366, line 15).

5. North American assembly requirement applies to vehicles sold after the date of adoption of the bill. (Page 386, line 3)

6. $7,500 credit is broken into two binary pieces meaning the vehicle either qualifies for each piece of the credit or it doesn’t. No longer based on size of battery. (Page 366, line 6)

6a. $3,750 of the new credit is based upon the vehicle having at least 40% of its battery critical minerals from the United States or countries with a free trade agreement with the United States. This is a list of countries with free trade agreements with the US.(Page 371)

6b. The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US. (Page 372, line 13)

7. The 40% minerals requirement increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027. (page 371 line 23)

8. The 50% battery components requirement increases to 60% in 2024, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029. (Page line 373)

9. The government has until the end of the year to develop guidance on the battery requirements. (Page 374)

10. Beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern are excluded from the tax credit. (Page 374, line 20).

11. One credit per vehicle. (Page 375, line 12)

12. Modified gross income limit of $150k for individuals, $225k for head of household, and $300k for joint returns. Definition of MAGI (page 375, line 22)

13. MSRP of vehicle must be $80k or less for SUVs, Vans and Trucks. $55k for all other vehicles. (Page 377, line 4)

14. Dealer can apply credit at time of sale. Dealer must disclose to buyer the MSRP of the vehicle, the applicable tax credit amount and the amount of any other available incentive applicable to the purchase. (Page 378, line 6)

15. Credit terminates December 31, 2032.

Used Vehicle Credit

1. Tax credit of 30% of value of used EV with $4,000 cap (Page 387, line 23).

2. Used vehicle must be at least two model years old at time of sale. (Page 389, line 7).

3. The original use of the vehicle must have occurred with an individual other than the one claiming the used tax credit. (Page 389, line 10).

4. Used vehicle must be purchased from a dealer. (Page 390, line 3).

5. Used vehicle price must be $25k or less. (Page 390, line 5).

6. Used vehicle qualifies for tax credit only once in its lifetime. (Page 390, line 7)

7. Purchaser must be an individual (no businesses) to qualify for used credit. (Page 390, line 14).

8. Purchaser may only claim one used vehicle credit per three years. (Page 390, line 20).

9. Modified gross income cap of $75k for individuals, $112,500 for head of household and $150k for joint returns. (Page 388).

10. Credit may be applied at time of sale by dealer. (Page 391, line 15).

11. Credit terminates on December 31, 2032. (Page 391, line 12).
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Old 08-01-2022, 10:15 AM   #3
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Process question - I thought we weren't supposed to discuss proposed legislation that hasn't come out of committee?
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Old 08-01-2022, 10:26 AM   #4
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Originally Posted by copyright1997reloaded View Post
Process question - I thought we weren't supposed to discuss proposed legislation that hasn't come out of committee?
As I noted in this post https://www.early-retirement.org/for...ml#post2743361

"the moderator team disallows most discussion of legislative proposals before they are reported out of committee"

Given that the thread was specifically started by one of the moderators to discuss this bill, you may safely conclude that this is one of the few exceptions.
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Old 08-01-2022, 10:28 AM   #5
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Prescription drug price reform to lower prices, including Medicare negotiation of drug prices – $288 billion
I'm all for this. This will be a HUGE help for people on Medicare with Part D drug plans. (especially us)
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Old 08-01-2022, 10:34 AM   #6
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Originally Posted by aja8888 View Post
I'm all for this. This will be a HUGE help for people on Medicare with Part D drug plans. (especially us)
+1000.
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Old 08-01-2022, 10:40 AM   #7
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Prescription drug price reform to lower prices, including Medicare negotiation of drug prices – $288 billion
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Originally Posted by MRG View Post
+1000.
+2000
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Old 08-01-2022, 10:42 AM   #8
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I'm all for this. This will be a HUGE help for people on Medicare with Part D drug plans. (especially us)

If this is a banned post, then please remove, but if there is 'for', than why can't there be an against.
I doesn't seem right that a bunch of people with over a million dollars want to pass a cost on to the younger generation.
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Old 08-01-2022, 10:45 AM   #9
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I'm all for this. This will be a HUGE help for people on Medicare with Part D drug plans. (especially us)
I initially thought so too, but someone convinced me that for Part D that the Part D carriers already negotiate drug prices with the drug companies and that the bigger benefits were for drugs used by Medicaid and the VA and perhaps drugs used in the Parts A and B programs.
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Old 08-01-2022, 10:54 AM   #10
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I initially thought so too, but someone convinced me that for Part D that the Part D carriers already negotiate drug prices with the drug companies and that the bigger benefits were for drugs used by Medicaid and the VA and perhaps drugs used in the Parts A and B programs.
My ex was on Medicaid and never paid more than a few dollars for a drug. One of my close friends is getting VA benefits (Viet Nam Purple Heart guy) and most of his drugs are free.

I paid $300+ last week for Prolia, my wife's osteoporosis drug after Medicare paid whatever.

There are drugs under Medicare that are not generic and we pay through the nose for them and those include my DW's breathing drugs and the Prolia. We (DW) are in the donut hoe now and prices are even higher.

Certainly Medicare drugs need some help here.
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Old 08-01-2022, 10:55 AM   #11
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Originally Posted by Time2 View Post
If this is a banned post, then please remove, but if there is 'for', than why can't there be an against.
I doesn't seem right that a bunch of people with over a million dollars want to pass a cost on to the younger generation.
I'm not sure how this is passing a cost on to the younger generation. Built into the act is also deficit reduction.

Drug companies have huge profits, mostly due to patent abuse. Much of the basic research is done by universities. However, the cost of bringing a truly innovative drug to market is prohibitive, because of all the clinical trials needed. Many "new" drugs are slight molecular tweaks in structure or delivery system, which convey no new advantage, but allow the companies to get a new patent. Most other countries negotiate drug prices, but Medicare was disallowed from negotiating drug prices in the 2003 legislation creating Medicare part D. Many folks in Congress get campaign contributions from Big Pharma, which is a problem. Bringing the price down may save lives. I'm not sure we are passing a cost on to the younger generation or saving them money too. If Medicare can negotiate a lower price on a drug, the insurance companies will expect to also pay a lower price too.

Note that this is NET income, after all expenses:

https://www.fiercepharma.com/special...20respectively.
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Old 08-01-2022, 11:04 AM   #12
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Originally Posted by EastWest Gal View Post
I'm not sure how this is passing a cost on to the younger generation. Built into the act is also deficit reduction.

Drug companies have huge profits, mostly due to patent abuse. Much of the basic research is done by universities. However, the cost of bringing a truly innovative drug to market is prohibitive, because of all the clinical trials needed. Many "new" drugs are slight molecular tweaks in structure or delivery system, which convey no new advantage, but allow the companies to get a new patent. Most other countries negotiate drug prices, but Medicare was disallowed from negotiating drug prices in the 2003 legislation creating Medicare part D. Many folks in Congress get campaign contributions from Big Pharma, which is a problem. Bringing the price down may save lives. I'm not sure we are passing a cost on to the younger generation or saving them money too. If Medicare can negotiate a lower price on a drug, the insurance companies will expect to also pay a lower price too.

Note that this is NET income, after all expenses:

https://www.fiercepharma.com/special...20respectively.
Exactly so. Abusive "product hopping" by branded drug companies is rampant. https://uspirg.org/blogs/blog/usp/pi...roduct-hopping So is collusion (market allocation and price fixing) among generic drug companies. https://www.justice.gov/opa/pr/pharm...-act-liability
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Old 08-01-2022, 11:09 AM   #13
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My DH is on Humira, one of the most expensive drugs. DH is on Medicare and has a good Part D supplement but immediately goes into the donut hole and pays over $8000 per year for his Humira. The proposed Medicare changes, especially the limit of $2000 per year and the ability of Medicare to negotiate prices will be a huge help to us.
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Old 08-01-2022, 11:11 AM   #14
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Quote:
Prescription drug price reform to lower prices, including Medicare negotiation of drug prices – $288
I am all for this also, but like everything else it falls short. It should include WAY more than 10-20 drugs, why the limit? Also of course the Insulin part is great to for those who need it, as well as ACA updates.
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Old 08-01-2022, 11:12 AM   #15
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My DH is on Humira, one of the most expensive drugs. DH is on Medicare and has a good Part D supplement but immediately goes into the donut hole and pays over $8000 per year for his Humira. The proposed Medicare changes, especially the limit of $2000 per year and the ability of Medicare to negotiate prices will be a huge help to us.
And us too, for several other drugs not off patent that DW has to take.
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Old 08-01-2022, 11:15 AM   #16
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Originally Posted by copyright1997reloaded View Post
Process question - I thought we weren't supposed to discuss proposed legislation that hasn't come out of committee?
Quote:
Originally Posted by Gumby View Post
As I noted in this post https://www.early-retirement.org/for...ml#post2743361

"the moderator team disallows most discussion of legislative proposals before they are reported out of committee"

Given that the thread was specifically started by one of the moderators to discuss this bill, you may safely conclude that this is one of the few exceptions.
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.
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Old 08-01-2022, 11:22 AM   #17
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I am all for this also, but like everything else it falls short. It should include WAY more than 10-20 drugs, why the limit? Also of course the Insulin part is great to for those who need it, as well as ACA updates.
Didn't realize it would be limited to 10 drugs out of the gate. Utterly mind-boggling. Well, at least it's a miniscule step in the right direction.
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Old 08-01-2022, 11:22 AM   #18
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I'm in favor of the Medicare/Medicaid related parts of the bill but I don't like the ACA subsidy extension. The subsidies where plenty good before and are now getting out of hand for the higher income people who shouldn't need it. EV tax credits are non-refundable which means they do nothing for the people who actually would need them. Most of the bill is wasteful spending on those who don't or shouldn't need the help.
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Old 08-01-2022, 11:34 AM   #19
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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.
^ This.

First thing that came to mind when I saw you post the topic. Indeed, the sausage-makers in DC have more than one way too squirt ground meat into a casing.
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Old 08-01-2022, 11:35 AM   #20
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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.
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