While learning about the Inflation Reduction Act, I found it interesting how the initial intention of
the law was to "help" inflation. However, the Inflation Reduction Act actually does not reduce inflation at all.
In fact, the Senate Budget Committee states that it could slightly increase inflation in 2023 (2022). Now despite this law could raise inflation in the future, the act still focuses on some economic concerns. Many are excited about how the law impacts the movement toward environmental awareness. In particular, what stood out to me was the clean energy tax credit. The Inflation Reduction act encourages citizens and small businesses to use clean energy equipment to encourage energy-efficient home improvements (Hansen, T., 2022).
Now considering there are more tax incentives to get cleaner energy within homes, I wonder how many actually will be able to afford the improvements or updates to their homes. Making clean energy more affordable is the only way to give citizens more opportunities to be eco-friendly because most citizens are low to middle-income. Once energy companies can market their products to all classes of citizens, the development of cleaner energy could potentially increase because affordability means potential for higher demand.
The Inflation Reduction Act is a prime example of how incentives are used within laws and policies. So this Inflation Reduction Act might not have helped inflation. Still, it was a big move to encourage a cleaner environment by incentivizing citizens to buy safer and cleaner electric utilities. The more laws and policies aim at a healthier and safer economy, the more we can grow and develop. So this act was the first step in a direction that needs to be prioritized. Especially if it saves citizens money in the long-run.
Sources
Hansen, T. (2022). Tas tax tip: What the inflation reduction act means for you - tas. Taxpayer Advocate Service. Retrieved October 14, 2022, from https://www.taxpayeradvocate.irs.gov/news/tas-tax-tip-what-the-inflation-reduction-act-means-for-you/
Senate Budget Committee. (2022). CBO confirms to Graham: Dems' "inflation reduction act" won't reduce inflation: U.S. Senate Committee on the Budget. Press Item | Press | Ranking Member's Newsroom | Ranking Member | U.S. Senate Committee On The Budget. Retrieved October 14, 2022, from https://www.budget.senate.gov/ranking-member/newsroom/press/cbo-confirms-to-graham-dems-inflation-reduction-act-wont-reduce-inflation#:~:text=CBO%20found%3A,slightly%20increase%20inflation%20in%202023.