The Joint Committee on Taxation (JCT), found that Democrats’ inflation reduction bill would most directly impact manufacturers with its corporate minimum tax.
The Inflation Reduction Act will be brought to the floor by Senate Democrats this week. This reconciliation bill is a compromise bill that Democrats hope will enact climate change programs, extend Obamacare subsidies through tax increases, and enact climate policy.
According to the JCT, a 15% corporate minimum tax would raise $313 billion and would be a great help for America’s struggling manufacturing sector.
Nonpartisan tax analysis committee determined that the manufacturing sector would receive 49.7 percent of the proposed tax from Democrats if the legislation was passed. This includes chemical manufacturing and transportation equipment manufacturing.
Senator Joe Manchin (D-W.Va.) talks to reporters on Capitol Hill in Washington, July 21, 20,22. (J. Scott Applewhite/AP)
Democrats, led by Senators. Senators Joe Manchin (D–WV) and Chuck Schumer, (D–NY), would tax manufacturing at a time when American factories orders are down for the second consecutive month.
The Institute for Supply Management’s new order index fell by 1.2 percent to 48. The latest survey by S&P Global Market Intelligence found that new orders for good also fell for the second consecutive month. This is the lowest point in the past two years.
Chris Williamson is the chief business economist at S&P Global Market Intelligence.
Both the rising cost of living and the worsening economy are the main causes of lower sales. In the face of a more bleak outlook, companies are becoming more cautious about purchasing and inventory management. They also appear to be reducing investment with July seeing a sharp drop in new orders for business equipment and machines.
JCT analysis isn’t the only study to question the Inflation Reduction Act’s benefits.
According to the influential Penn Wharton Budget Model, inflation reduction bills would have little impact on inflation.