During a House Oversight Committee hearing before the congressional recess, Rep. Glenn Grothman (R-WI) questioned experts about the Inflation Reduction Act tax codes.
00:06I was just looking at all the birds who were killed by windmills.
00:09Just horrible.
00:10I like the little birds.
00:12Okay, we'll start with Dr. McBride.
00:16We were told the IRA Inflation Adjustment Act was a deficit-reducing bill.
00:23I think the Republicans knew all along that it was questionable.
00:26It went from reducing the deficit by billions of dollars to increasing the deficit by hundreds of billions of dollars.
00:33Why is the CBO now reversing course on the estimated cost of the Inflation Reduction Act?
00:41Well, they haven't released a complete reanalysis of the Inflation Reduction Act.
00:46I would love it if they did.
00:49We've been pushing for that ever since enactment of the bill in 2022 because there were, as I mentioned in my testimony,
00:56a lot of questions right out of the gate about the cost of the credits.
01:00And over time, we've gotten, you know, every element of the IRA actually has a lot of uncertainty about it.
01:08A lot of novel stuff going on in that legislation.
01:13I can talk at great length about the various things involved in the corporate alternative tax.
01:20The buyback tax, again, that's where the revenue was supposed to be raised along with the drug pricing provision.
01:27The best indication we have is that the corporate alternative tax and the buyback tax in particular are so complicated and so difficult to implement,
01:40they actually just didn't implement them.
01:42The IRS allowed taxpayers to not pay the tax for the first two years after enactment.
01:53That doesn't mean they're off the hook.
01:55It means that they haven't yet finalized the regulations actually to implement the corporate alternative minimum tax in particular.
02:03It's turned out to be so complicated to sort out.
02:08And so this is the big revenue raiser in the bill, particularly over the first few years and in the first decade,
02:15the corporate alternative minimum tax.
02:17It's not raising revenue, apparently, just yet.
02:22So what we have is very little revenue coming in the door, but a tremendous amount going out the door,
02:29tremendous amount of spending going out the door in the form of these credits.
02:32And that's been the general dynamic of this legislation ever since it was enacted.
02:39So, yes, we do need a complete reanalysis of the bill.
02:43We have not gotten it from the CBO.
02:45We are getting bits and pieces about it over time.
02:48And as part of the legislation going through the House now,
02:51we are getting a rescoring of the credits in particular.
02:55And that's showing that, yes, there is a lot of money that is going out the door with these credits.
03:01The current House bill rolls them back and saves about $515 billion over a decade from that measure alone.
03:11I hate it when legislators use the tax code to try to influence public policy.
03:16They ought to just, you know, put appropriations out there rather than try to play around with this.
03:22Nevertheless, it does bother me over time that the tax code does sign their provisions that seem to benefit the ultra-wealthy at the expense of the common man.
03:33Could you describe who is largely getting the benefits of these tax credits in the so-called inflation reduction?
03:44Who is paying the price here?
03:46Who is paying the price and who is getting their taxes reduced?
03:50Mr. McBride, Dr. McBride.
03:52Sure.
03:53Well, as we discussed in our testimonies here, it's very clear in both just anecdotal evidence.
04:04You look around, you know, who is buying solar panels, who is buying electric vehicles.
04:09You know, those are high-income people.
04:13And you can see that with your own eyes.
04:17The data and the studies support that.
04:21And for that matter, a lot of the credits go to businesses.
04:28And again, this is an area of uncertainty.
04:31We have tried to identify what types of businesses exactly.
04:35And honestly, it's not very clear.
04:38But I mentioned the statistic in my testimony that the largest corporations, I believe that's those with more than $25 billion in revenues, received more than half of the major businesses.
04:54So largely, this is a tax cut for the rich, you think?
04:58I think.
04:59That's what it looks like to me.
05:00I think so.
05:01I'm almost around time, so I've got to go quick to Mr. Lieberman.
05:05These energy subsidies are responsible for enormous cost.
05:11Overall, insofar as it drives up cost, who is going to pay the price for that?
05:17Is this another thing that's kind of a regressive tax on the average guy?
05:22Or how would you describe who's paying the price for this?
05:26There's almost nothing in the Inflation Reduction Act that's geared towards lowering energy prices.
05:31So energy prices will go up.
05:34One thing I would add, for example, is that there's a lot of provisions in there geared towards discouraging use of natural gas and making homes all electric.
05:43Well, natural gas is three times cheaper than electricity on a per-unit energy basis.
05:48So it's one example where climate policy is very much at odds with pro-consumer policy.
05:54Well, if you're a well-off person, I suppose it doesn't matter.
