Scrapping these Green Energy Tax Subsidies Could Save the Inflation Reduction Act

Scrapping these green energy subsidies could save the InflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. Reduction Act.

Congressional Republicans are looking for ways to pay for extending the tax cuts scheduled to expire at the end of the year. Repealing the green energy taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. subsidies expanded or introduced in the Inflation Reduction Act is an appealing option. We at Tax Foundation estimated repealing all of these tax breaks would raise $851 billion over the next decade.

However, several House Republicans recently signed a letter defending parts of the Inflation Reduction Act. Partial repeal could still raise significant revenue. If lawmakers choose this path, they should use a two-pronged approach: scrapping the credits that don’t work and simplifying the ones that do by getting rid of the “Everything Bagel” provisions weighing them down.

The Inflation Reduction Act introduced or expanded more than 20 tax programs with the primary goal of reducing greenhouse gas emissions. However, most modeling of the Inflation Reduction Act shows the law is most effective in reducing power sector emissions.