A sweeping package to combat climate change, lower health care costs, raise taxes, reduce the deficit, and contain significant new funding for National Parks and public lands, cleared the U.S. Senate last Sunday.
The budget reconciliation legislation, also known as the Inflation Reduction Act of 2022 (IRA), passed with 51 Democrats in favor to 50 Republicans against and Vice President Harris breaking the tie, as per the News & Insights report of the RV Industry Association (RVIA).
Senate Republicans argued the legislation does nothing to combat inflation or bring the economy out of stagnation but instead gives us higher taxes, more spending, higher prices, and an army of IRS agents. A vote in the House is expected to approve the legislation on Friday.
The Inflation Reduction Act contains several provisions of specific interest to RV manufacturers and suppliers.
The bill establishes a 15% minimum corporate tax on firms’ adjusted financial statement (book) income with over $1 billion in profits calculated over a three-year period. In addition, there is a 1% excise tax on the value of stock buybacks.
The legislation adds $80 billion to boost Internal Revenue Service enforcement, giving the IRS the biggest budget increase in its history.
It contains approximately $370 billion in new spending to combat climate change and cut carbon emissions using two approaches: new incentives for private industry to produce far more renewable energy, such as expanded tax credits for renewable projects, and incentives for households to transform their energy use and consumption.
For example, the bill creates a new but restrictive $7,500 credit for electric vehicle purchases and removes the cap limiting the benefit to only the first 200,000 vehicles sold per manufacturer. The spending levels in the IRA represent the biggest climate investment in US history.
Regarding healthcare, Medicare would be allowed to negotiate drug prices, starting with ten high-priced drugs in 2026 and expanding in 2027 and beyond. The bill caps out-of-pocket drug costs for seniors enrolled in the Part D program at $2,000 per year. Obamacare subsidies are also extended.
The bill includes $500 million for National Parks and public lands conservation, plus another $200 million for National Park Service priority deferred maintenance. The land conservation funds are not subject to cost-sharing or matching requirements.
In addition, the bill provides another $500 million to hire employees to serve in units of the National Park System, or national historical or national scenic trails, administered by the National Park Service.
The RVIA will also release an in-depth analysis regarding the critical components of the legislation over the next several weeks.