Consequences of “The Inflation Reduction Act of 2022” - Unintended??? 

Politically there has been a lot said about The Inflation Reduction Act of 2022. The legislation purportedly, will not increase taxes on the average everyday American like all of us. This Act is intended to close tax loopholes only on the Super Rich and finally make them pay their fair share of taxes.
These political statements are true, but the elephant in the room that no one has mentioned and quite frankly is ignoring; what else is hidden in this bill.
Hence, the unintended consequences to you and me now that it has been passed.
Let’s talk about this elephant/donkey and how it will create more harm than good to small businesses and the everyday working Americans. Let's put aside political rhetoric for a moment and look at what else this bill contains.

Here is the carrot- This bill imposes a “Corporate alternative minimum tax” on corporations of 15% and will also increase taxes imposed on certain select high-wealth earners.
Here is the stick - There is an enforcement arm within this bill that will step up IRS enforcement activities. Not Great, that’s the stick. The expanded IRS enforcement will not affect the wealthiest 1%, but it will end up hurting the middle class, that is you and me.
The bill allocates $80 billion for the IRS over the next 10 years. This is in addition to the current annual budget requirements. This increase will more than double the governments tax collectors, releasing 87,000 new IRS agents onto the streets.

  • Currently the IRS conducts roughly 600,000 audits annually. These not only include face-to-face audits but correspondence audits, document matching, etc. All the various annual audit are already disproportionately hitting lower and middle-class taxpayers.
  • The new stronger enforcement plan will allow the IRS to perform an additional 1.2 million plus audits annually. In 2022, there are only 2,755 billionaires in the United States. Who do you think the IRS will be turning their attention towards next?
  • The new enforcement action will not garner the $700 billion projected and no billionaire will lose any sleep. They have lawyers and accounts on their payroll so they can sleep at night without worry; they are protected.

So where will the IRS make up that deficit?  Yes, small businesses and middle-class Americans.
So, great news, ultra-wealthy taxpayers and corporation will finally pay their fair share of taxes, but the real tax burden will be on the backs of the small business owners and individuals.

  • We will be the ones shouldering the burden of this tax bill.

There are no new taxes on lower and middle-class taxpayers in truth, but in reality, who will really be paying for this $700 billion tax increase on the ultra-rich and corporations.

Be prepared, be smart, be informed, be protected. - Jeff