What you should know.

The Inflation Reduction Act

*quick note: items in this bill won’t have an impact on inflation for years to come

1. Tackling Climate Change
   • Electric Vehicle Credits – for New and Used vehicles.
   • Homeowner’s Credits – includes heat pump water heaters, heat pump systems for heating, HVAC, and upgrading solar panels and improving insulation. Program runs through 2031.
   • Solar Panels and solar battery systems (30% tax credit through 2034).
2. Healthcare Reform
   • Subsidies to keep premiums down for people using state exchanges.
   • Cap on drug costs for Medicare participants ($2000 out-of-pocket).
   • Lower drug prices (we won’t see until 2026).
3. Tax Reform
   • Minimum Taxes (15%) that will affect very few large corporations. Tax professionals will assist corporations in creatively navigating this, and I imagine it will not significantly increase tax revenues.
   • Tax on stock buybacks (1%). This will have an impact on how corporations distribute (or don’t distribute) their profits (e.g. dividends, buybacks, R&D, etc.).

The CHIPS* and Science Act

*(Creating Helpful Incentives to Produce Semiconductors)

• To promote domestic semiconductor production
  • Will likely have a profound impact on the Workforce. Should promote a shift into STEM fields with investment across the USA. Taiwan is a major producer of semiconductors and can benefit China significantly if China decides they want to reclaim the island. It is in the USA’s interest to reduce its reliance on Taiwan for semiconductor production.
  • Subsidies for Semiconductor Industry
    • Companies who will benefit: INTC, TXN, MU, AMD, NVDA, QCOM
• Big funding increases for the Department of Energy’s Office of Science, the National Science Foundation and the National Institute of Standards and Technology. The intention is to maintain USA leadership in STEM fields; particularly technology.

Citations:

1. https://www.scientificamerican.com/article/nearly-53-billion-in-federal-funding-could-revive-the-u-s-computer-chip-industry/
2. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/
3. https://en.wikipedia.org/wiki/United_States_Chips_and_Science_Act
4. https://en.wikipedia.org/wiki/Inflation_Reduction_Act_of_2022
5. https://www.kiplinger.com/investing/stocks/605045/bidens-inflation-reduction-act-investing-winners-and-losers
6. https://www.npr.org/2022/08/07/1116190180/democrats-are-set-to-pass-a-major-climate-health-and-tax-bill-heres-whats-in-it