Economic benefits Latinos can expect from Inflation Reduction Act
The recent passage of the Inflation Reduction Act (IRA) of 2022 promises to lower health care and energy costs, makes record investments in efforts to tackle climate change, and reduces the federal budget deficit by asking the wealthy and corporations to pay their fair share in taxes.
A recent White House summary takes a closer look at the bill’s projected impacts on Latinos:
EXPANDING HEALTH CARE ACCESS AND AFFORDABILITY
The IRA lowers health care costs by making prescriptions for seniors and insurance purchased under the Affordable Care Act more affordable.
Studies show that Latinos aged 65 and over are 1.5 times more likely than White seniors to have trouble affording medications and 2 times more likely not to fill prescriptions due to their costs.
The IRA allows Medicare to use its buying power to negotiate the price of high-cost drugs and requires manufacturers to pay a rebate when the prices of their drugs increase faster than inflation. The measure also caps the price of insulin at $35 per month for seniors and caps the amount any senior pays for prescriptions at a pharmacy at $2,000 per year.
The IRA also extends more generous health insurance-premium tax credits for policies purchased on the state exchange -- meaning that roughly 700,000 Latinos will continue to have health coverage next year than if the credits had expired. The credits were originally included in the American Rescue Plan signed into law last year. As a result, the White House estimated that 80 percent of uninsured Latinos had access to a plan in 2021 for $50 or less each month and 69 percent could find a plan for $0 a month.
We would be remiss if we did not point out that, as is the case with any compromise, there are provisions of this deal that are not ideal. For example, the measure initially limits Medicare to negotiating prescription prices for just 10 drugs, which will increase to 20 over time. There is clearly room to do more.
LOWERING ENERGY COSTS AND TACKLING CLIMATE CHANGE
The IRA takes the most aggressive approach in American history to combating climate change -- which disproportionately impacts communities of color. That fact alone should not be forgotten.
It makes the purchase of energy-efficient appliances and the installation of more efficient doors, windows and insulation more affordable through direct rebates at the time of purchase and tax credits of up to 30%. That has longer-term benefits, as energy-efficient appliances and construction save consumers money on their utility bills over time.
The IRA’s investments in clean-energy in solar, wind and other clean fuels includes incentives for solar projects on federal affordable-housing projects and in low-income communities. It also prioritizes a new Clean Energy Accelerator designed to spur the use of zero-emission technologies, prioritizing that more than 50% of its investments be in disadvantaged communities.
The measure also expands tax credits for the development of clean-energy projects and provides bonus credits to businesses that pay a prevailing wage — meaning it will lead to the creation of good-paying jobs.
While the IRA’s incentives of up to $7,500 for the purchase of new electric vehicles (EVs) may be out of reach for many Latinos, the measure also includes tax credits of up to $4,000 for used EVs, which is intended to make them more affordable.
It also includes money to reduce and monitor air pollution at industrial facilities and schools in disadvantaged communities
Again, the compromise that delivered the IRA means it’s not perfect. Provisions intended to spur oil and gas leasing on federal land are of particular concern to indigenous people and other people of color — who bear the burden of the impacts of pollution and climate change. And, while some of the money is specified to directly benefit impacted low-income and underserved populations, it will be critical to watch how the remainder is distributed. The dedicated amounts in the legislation should serve as the floor for investing in underserved communities -- not the ceiling.
MAKING THE WEALTHY PAY THEIR FAIR SHARE
The IRA also restores fairness to the tax code that was altered in favor of the wealthy and corporations in 2017. The measure ensures that large corporations and the wealthy pay the taxes they owe, cracks down on corporations that make a profit but are not paying taxes, and imposes a surcharge on corporate stock buybacks.
Importantly, it does not increase taxes on anyone making less than $400,00 per year.
President Joe Biden campaigned on a promise to build an economy that works for working families -- and the IRA legislation is another significant part of that foundation.
The legislation -- which required some difficult compromises -- ultimately delivers for our community as it promises to expand health care access and affordability, makes critical investments in addressing climate change and lowering energy costs, and restoring fairness to our tax code.