The Congressional Budget Office information cited in Max Morgan’s letter entitled “Inflation Reduction Act a Lie,” published on Aug. 12, is factually incorrect.
Specifically, Mr. Morgan stated: “Congress’ bipartisan Joint Committee on Taxation estimates tax rates will go up in 2023 for nearly every income bracket. Taxes will go up a staggering $16.7 billion on taxpayers earning less than $200,000 per year and $14.7 billion on those earning between $200,000 and $500,000.”
The first page of the CBO report contains a table showing the actual amounts projected by the CBO for 2023. The amounts shown in the second column indicate that, in 2023, the taxes for people earning less than $200,000 per year decreases by $11.891 billion. For those earning between $200,000 and $500,000, taxes are expected to increase by $7.439 billion rather than the $14.7 billion stated in Mr. Morgan’s letter. While the report does not go into detail, I suspect that the lion’s share of that increase is borne by taxpayers earning more than $400,000.
The CBO report also states that 2023 income taxes on households earning over $500,000 are projected to increase by $13.289 billion. The overall projected 2023 tax increase is $8,833 billion.
Furthermore, in footnote 3 shown below the table, the CBO stated that the federal income tax amounts are preliminary and are subject to change. The report states that the CBO estimates do not include the indirect effects of the legislation, which include extending health care insurance premium tax credits under the Affordable Care Act, etc. If included, those omitted items would undoubtedly indicate that the legislation improves the economics of households earning less than $400,000.
Finally, the report states that the income categories shown are measured at 2021 levels. Since the 2021 filing season is not yet over (millions of taxpayers have filed to extend the due date of their tax returns until Oct. 15), the 2021 measured levels must be based on preliminary estimated amounts rather than showing the actual amounts that will ultimately be reported by the IRS. Therefore, the differences in taxes paid between 2021 and 2023 are also subject to change.
The CBO was rushed into making the projections, which were published 48 hours after the Senate passed the bill. The preliminary projections are notably incomplete and have been criticized by many economists.
Jim de Bree