“Inflation Reduction Act”: Tax Burden to Fall Heaviest on the Poor
From: John Locke Foundation
A newly-released analysis from the bipartisan Joint Committee on Taxation (JCT) shows that the negative impacts of the tax hikes in the “Inflation Reduction Act” would fall hardest on low-income households.
My colleague Paige Terryberry earlier this week exposed how the bill would actually increase inflation, a burden that falls hardest on low-income households.
Adding onto this burden, the JCT analysis estimates that the tax burden would fall disproportionately on the poorest households. Specifically, households with less than $10,000 in income would see their tax burden rise by 3.1%, compared to just 0.4% for those earning above $200,000 in the bill’s first year. Estimates of future burdens yield similar results, with the lowest income households seeing the largest percentage increase in tax burden.
Indeed, taxpayers of all levels would see an increase in their burdens under this bill.
The JCT report most likely attempts to estimate the tax incidence of the bill’s provisions, rather than just a static look at who the new taxes are directly levied on.
The tax incidence evaluates who bears the actual burden of a tax. For instance, the corporate tax increase’s burden will fall on workers in the form of suppressed wages and lost jobs. The tax on crude oil will be passed along to customers in higher gas prices.
At a time when the low income communities are being mercilessly hammered by inflation, the so-called Inflation Reduction Act would both make inflation worse and increase the tax burden borne by those who can least afford it.