President Biden on Tuesday signed into law the Inflation Reduction Act, a wide-ranging party-line energy spending bill funded with corporate tax increases.
The bill was passed through the budget reconciliation process, meaning it was a party-line vote with only Democrat support.
Specifically, the bill would raise the corporate minimum tax to 15 percent for companies with annual revenue over $1 billion and would massively increase IRS tax enforcement, including the authorization to hire up to 87,000 IRS agents. Proponents of the bill claim that would raise $80 billion over a decade to help fund the bill’s spending. Exactly which taxpayers and taxpaying entities those IRS agents would focus on is not clear.
On the spending side, the bill includes $7,500 rebates for new electric vehicles and $4,500 tax credits for used ones, consumer home energy rebate programs, consumer tax credits for home efficiency technology, investment tax credits to build electric vehicles, wind turbines, and solar panel manufacturing facilities, grants to restructure auto manufacturing plants to produce electric vehicles, a methane emissions reduction program with an escalating fee per metric ton of methane emitted beginning in 2025, “environmental and climate justice block grants,” grants to reduce air pollution at ports, grants for the purchases of electric heavy duty vehicles used by schools, grants for forest conservation and urban tree planting, tax credits and grants to support the domestic production of biofuels, grants to build biofuel infrastructure, grants for coastal habitats, grants and tax credits to reduce emissions from industrial manufacturing, extensions to Affordable Care Act subsidies, provisions to allow Medicare to negotiate prescription drug prices, funding for the administration to invoke the Defense Production Act to produce heat pumps and mine and process critical minerals, reinstating an offshore oil and gas lease sale of 80 million acres in the Gulf of Mexico that was vacated by a federal judge due to an environmental review, raising royalty rates companies pay the government for onshore and offshore drilling on federal land, a window in which a lease for offshore wind development cannot be issued unless an oil and gas lease sale has also been held in the prior year, withdrawing the Trump administration’s moratorium on offshore wind leasing in the southeastern U.S. and the eastern Gulf of Mexico, and a “clean energy technology accelerator” to support the development of emission-reduction technologies.
