Explaining the Inflation Reduction Act





8/22/22







So, lets address what everyone wants to know: Are My Taxes Going Up? If you or you & your spouse together make more than $400,000 from wages and investments, then according to President Biden yes, he will be increasing your taxes. People below that amount don’t have to worry about new taxes, just yet. The president claims the bill will recoup the almost $1 trillion expended, over the next decade by raising taxes and cutting loopholes. As you will see here, it does not.

Here is the list of the specific tax changes, as it was signed into law on August 16th.
- There are changes to holding period tax rates for incomes of $400,00 and up.
- It extends the Premium Tax Credit from the American Rescue Plan Act.
- It modifies, extends or creates several tax credits for green energy.
- It raises taxes and fees on crude oil, imported petroleum and fossil fuel producers and users.
- It imposes a 95% excise tax penalty on drug manufacturers.
- It increases the research & development tax credit for so called small businesses.
- And it gives the IRS $80 billion for enforcement, expansion and equipment upgrades

Here is what all that means.
We believe that while there are no new taxes for the lower incomes, everyone will pay the increase as manufacturing and drug companies will undoubtedly pass on the increased cost to the consumer, us! That is their right and their responsibility to their shareholders and just good business.

Now, what most tax professionals and political pundits are completely missing in this bill is the effect it will have on the stock market. We believe, as the brokers, investors, Drug Companies, Fossil Fuel Producers and Car Manufacturers get hit with these massive new tax increases, they will lower their profit margins on paper which lower their tax burden, while also devaluing their stocks and thus cause the average American Investor, including everyone with a 401K to lose billions in their investments. And yes, you’re correct in thinking that means less tax collections! It will! So much for the IRS recouping the cost of this bill in 10 years.

And speaking of the IRS, they will begin auditing more people and focusing on collections rather than helping people to solve simple tax issues, which is exactly where the IRS is already failing miserably.

Does the IRS need more funding and people? Absolutely YES! Do they need to restructure their operation, improve security and upgrade their computer systems? Again YES! However, the IRS does not need to focus on strong arming the American taxpayer. The reality is, the IRS will probably not actually ever hire the full 87,000 personnel. More than likely, they will hire about half that and focus the majority of them on collections, audits and examinations.

The Treasury Secretary said that the new agents will only be targeting incomes of $400,000 and up. She’s either lying to America or she doesn’t understand the way the agency she’s in charge of, the IRS, works. Average taxpayers will be targeted, I guarantee you. You know who won’t be targeted? The over 200 congressmen and senators who owe the IRS back taxes. The IRS should be focusing on serving the American taxpayer with data, equipment and trained people to help, not prosecute.

And in case you hadn’t noticed, these tax law changes are intentionally geared to punish the Fossil Fuel Industry and Car Manufacturers, while at the same time giving tax breaks for supposedly Green Energy. In our opinion this is another example of using a government agency to enforce a Green Agenda.

To sum up, The Inflation Reduction Act is a huge stinking pile of CRAP! According to the Non-Partisan, Non-Profit, Tax Foundation and most tax advisors, this bill will not reduce inflation one bit. It will cut 30,000 jobs in the coal and car manufacturing industries, in the first year alone. But the green agenda politicians couldn’t care less about that. Even the (GAO) Government Accounting Office calls this bill a zero gain and bad for America.

This bill will cost the American Taxpayer for generations to come, all while doing very little to actually help anyone other than the politicians own investments. But remember, insider trading is perfectly legal for them.

Lastly, in our 25 years of experience, increasing taxes NEVER increases tax revenue, but lowers it, while cutting taxes has ALWAYS increased tax revenues.

We hope this was helpful. Please email your comments or questions to info@harringtontax.biz.