Democrats recently passed a huge package to increase fairness in America, from ensuring corporations pay their fair share of taxes to decreasing the cost of health care for America’s senior citizens
The far-reaching bill, which also invests in clean energy infrastructure, passed the US Senate August 7 by Democrats along strict party lines and was passed Friday by the House, also along party lines. The bill now moves on for President Joe Biden’s signature, and then it will be at work for the American people.
No Republicans voted for it.
Here are some two of the big changes.
Reducing Health Care Costs
The biggest victory is the provision that allows Medicare to negotiate drug prices with drug companies. Starting in 2026, Medicare will be able to negotiate the prices of 10 drugs, with the number increasing gradually until 2029.
The number of people affected at first depends on which drugs are chosen and the result of the negotiations, but another provision of the bill caps seniors’ prices at $2,000 per year.
It keeps companies in check too. If pharmaceutical companies increase their prices faster than the inflation rate in Medicare, they have to pay a rebate.
Democrats tried to expand this provision to private insurance companies as well, but it was struck from the bill for not following procedure.
The same thing happened to the $35 cap on the price of insulin, a lifesaving drug for millions of Americans that can be so expensive patients resort to rationing it or traveling to Canada for the medicine instead.
Because of how important the measure is, Democrats held a vote to waive the procedural rule and keep it in the bill, but it needed 60 votes and almost every Senate Republican voted against it, including Sens. Chuck Grassley and Joni Ernst.
However, insulin prices for Medicare will now be capped at $35, which will still benefit many.
For people who get their insurance through the Affordable Care Act, the bill extends subsidies until 2025, which will lower the costs people pay out-of-pocket.
Making Corporations Pay Taxes
Many of the tax provisions are aimed at cracking down on the wealthy individuals and big corporations who use loopholes to avoid paying taxes.
That includes a new tax on corporations buying their own stocks. The corporations that do this most include Apple, Google’s parent company Alphabet and Facebook’s Meta.
The strategy is a way for companies to artificially boost the value of their stocks and return money to investors. Until the Inflation Reduction Act, corporations didn’t have to pay taxes on the purchases either. Those were some of the reasons why buybacks were illegal until 1982.
Since the start of the pandemic, stock buybacks have increased at the same time as corporate profits have. The tax is small—only 1%—but it opens a whole new stream of money for the government, according to Mark Mazur a former assistant treasury secretary for tax policy. Congressional projections estimate $74 billion will be raised over the next decade with this tax in place.
In addition to that, corporations that make more than $1 billion a year will face a 15% tax, that includes Apple, Amazon, Microsoft, and many others.
The bill also includes funding for the Internal Revenue Service (IRS) to be phased in over 10 years, in order to address 2010 staffing cuts and give the agency the resources to pursue corporate tax cheating.
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