Biden has emphasized that the new law imposes a minimum corporate tax rate
The US Senate has approved this Sunday by 51 votes in favor and 50 against the Democratic bill introducing tax, climate and drug reforms after a year of internal debate among the Democrats themselves despite the White House’s support for the initiative.
“I am confident that the Inflation Reduction Act will be one of the most decisive of the 21st century,” Democratic spokesman Chuck Summer stressed before the vote, which was finally decided by the casting vote of Senate President Kamala Harris, US Vice President, after a marathon night of votes and amendments, Bloomberg reports.
Democrats claim it is the largest initiative in terms of investment to combat climate change ever made in the United States. It aims to reduce greenhouse emissions by 40 percent from 2005 by the end of this decade.
It also aims to prevent large corporations from abusing tax breaks to pay less and will allow Medicare–part of U.S. public health care–to negotiate drug prices for the first time. It will mean the first substantial cuts in the public budget deficit in more than ten years.
Following the news, U.S. President Joe Biden has assured that “Senate Democrats have sided with American families.” “I ran for president on a promise to get the government to do things again for working families, and that’s what this bill is,” he has argued.
This law “creates jobs to make solar panels, wind turbines and electric vehicles in America, with American workers” and “lowers energy costs for families by hundreds of dollars a year.” Funding comes with “a minimum corporate tax so that our wealthiest companies start paying their share” although it “does not raise taxes on those making less than $400,000 a year.”
“The House should pass it as soon as possible and I look forward to signing it into law,” Biden reiterated.
Meanwhile, Republicans have remained united in their opposition to the initiative and believe it will fail to reduce inflation and increase taxes, which could plunge the country into recession.
Republican spokesman Mitch McConnell has pointed out that “the billions of dollars that will raise taxes in the recession will cost jobs.”
The initiative was presented by Biden as a milestone similar to Franklin D. Roosevelt’s New Deal, but has finally been downgraded to achieve its approval with the support of the Democrats closest to Republicanism, Joe Manchin and Kyrsten Sinema.
The $6 trillion initially planned has become about $437 billion, although everything points to it being an important touchstone for Biden’s first term and one of the weapons to be used by the Democrats in the November mid-term elections.
In tax matters, the aim was to reverse the reform pushed by Donald Trump in 2017, but in the end the corporate tax has not been modified and top earners will continue to pay the same taxes.
Nor does it pick up the 15 percent across-the-board minimum tax target that the United States negotiated with nearly 140 countries, nor does it pick up the $10,000 cap on state and local deductions.
Nevertheless, Democrats claim to be satisfied with the outcome. “It’s the first real U.S. initiative to fight the climate crisis. It’s the first time we’ve opened the door for Medicare to be able to negotiate with pharmaceutical companies,” Democrat Elizabeth Warren said after the vote.
“And it’s the first time we’ve told companies over $1 billion that they will have to pay a minimum tax. These three issues are historic,” she remarked.