(PartiallyPolitics.com) – Congress members from both political sides have often spoken about the need for energy tax law reforms, however, instead of pursuing bipartisan energy tax policies that would help promote a technology-neutral approach, the Democrats instead attempted to pass their energy reforms through the Inflation Reduction Act (IRA).
Republicans have widely criticized the Act, stating that it is likely that it will backfire and will lead the country towards a pathway where they are forced to continue issuing larger and larger subsidies, which will end up rewarding industries that are reliant on China.
One of the many problems that they have brought up is how costs, which are estimates for the IRA’s energy tax incentives, have increased greatly since the Inflation Reduction Act was first passed. Originally, it was calculated that the new climate and energy provisions would cost the IRA close to $385 billion, but the revisited Penn Wharton’s Budget Model now calculates the cost to be closer to $1 trillion.
Apart from the increased cost, following the passing of the bill, America’s relationships with its trade allies also appear to have taken a hit. In part, this is because of the electric vehicles tax credits, which many trading partners have taken issue with. Criticisms have also arisen from members of Congress belonging to both parties, especially as the current agreement does not help open up the market for American workers.
Finally, both American producers and consumers have found themselves at a disadvantage as domestic supplies of necessary minerals eligible for credit are not enough to meet the nation’s current demands.
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