An analysis from the Tax Foundation determined that the so-called Inflation Reduction Act could result in 30,000 jobs disappearing.
The conservative organization discovered that the legislation, which is expected to be narrowly passed in the Senate this weekend, would result in significant “full-time equivalent” job losses, as well as a 0.1 percent decrease in GDP and 0.1 percent decrease in wages, The Washington Examiner reported on August 2.
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On jobs specifically, the foundation said that the 15 percent minimum corporate tax would cost roughly 23,000 jobs and “carried interest” would gut another estimated 5,000.
Companies will be footing the bill for higher taxes, and they might be forced to lay employees off in order to pay less or afford their new higher amount, but Democrats are not interested in acknowledging the trickle-down effect.
When referencing the bill’s supposed intention, to reduce inflation, it’s unclear what it would actually do.
Lastly, to the extent the durability of the bill’s provisions are in doubt—that is, due to the lack of bipartisan support—it may have little impact on expectations about the fiscal outlook and therefore inflation. On balance, the long-run impact on inflation is particularly uncertain but likely close to zero.
As RedState reported, it’s true that the July jobs report surpassed expectations by adding on 528,000 jobs and touts a 3.5 percent unemployment rate, but the hype around the report misses the point. What’s hurting Americans most is inflation, as reflected in the Consumer Price Index. With the annual inflation rate at 9.1 percent as of the June report, it’s clear that while Americans are working, prices are still doing damage.
According to Federal Reserve Economic data, the average American does not have as much disposable income as they used to. American Enterprise Institute fellow Jay Cost posted the chart to Twitter, which shows a significant spike when stimulus checks were given out, but that extra cash quickly fizzled out.
One thing is clear: The Inflation Reduction Act does not live up to its name, and it seems more likely than not that it will do more harm than good. As high government spending is the main factor for this inflation mess, it should be known that throwing more cash at the issue will not resolve it.