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Aug. 13, 2022, 10:52 a.m. EDT

House passes Inflation Reduction Act: What Democrats’ bill does for climate, drug prices and taxes

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Robert SchroederVictor Reklaitis

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Before the deal, 13 million people were facing higher health-insurance premiums next year. Now, Affordable Care Act subsidies will be extended for three years, sparing millions of Americans.

Democrats’ goal of lowering insulin prices for Medicare is expected to become law. But during a lengthy process to amend the bill over the weekend, Senate Republicans blocked a $35 price cap on insulin costs for patients on private insurance.

Now see: Insulin cost remains ‘catastrophic’ for millions of Americans, despite Inflation Reduction Act capping Medicare copay at $35

TAXES

The bill’s 15% minimum tax for large companies that pay little or nothing in income taxes could hit big names like Amazon /zigman2/quotes/210331248/composite AMZN -1.78% and Tesla, Barron’s reported. The tax would apply to those that have averaged $1 billion of adjusted pretax profit in the past three years.

Barron’s: Tesla and 9 other companies that would take a hit from a 15% minimum corporate tax

While the bill doesn’t directly raise taxes on middle-class households, Republicans have touted analysis saying the bill’s tax increases will hit working families with “higher prices, fewer jobs and lower wages.”

The Inflation Reduction Act also contains a 1% tax on stock buybacks. Some analysts, reported the Wall Street Journal, said they don’t expect the tax to dent companies’ enthusiasm for repurchases .

Market Extra: Stock buybacks near $800 billion this year after hitting all-time record

Democrats dropped a plan to close the so-called carried interest loophole in the face of opposition from Sen. Kyrsten Sinema, an Arizona Democrat. But, after pressure from Sinema, the party agreed to protect companies owned by the private equity industry from the new minimum tax .

Now read: An investor’s guide to the Inflation Reduction Act — how to prepare your portfolio if the bill becomes law

This is an updated version of a report first published on Aug. 8, 2022.

/zigman2/quotes/210331248/composite
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Market Cap
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