Letter: Understanding the tax implications of the Inflation Reduction Act

As we approach Election Day, misinformation proliferates the airways.

An example of this is the false claim that taxes have been raised on low- to middle-income taxpayers and the IRS has been armed to wage war against this group. I was recently asked by a person, “Aren’t my taxes going up next year?”

This person’s annual income is around $30,000, including Social Security. I assured her that contrary to what she has heard, her taxes will not be going up.

Here are the facts regarding the main tax provisions in the Inflation Reduction Act that was recently signed into law.

There are no changes to the individual tax rates regardless of the amount of income someone makes. The most significant revenue raising provision is a new corporate alternative minimum tax.

The new tax applies only to certain large corporations with average annual adjusted financial statement income of more than $1 billion. Currently, many large corporations escape income tax even though they are extremely profitable. In conversations with people on the subject, I have yet to have someone offer an objection to these profitable corporations paying more income tax.

Taxpayers have suffered due to a stripped-down IRS often waiting months for refunds and not getting help when they need it. The increased funding will help bring the IRS into the 21st century with updated technology and will beef up enforcement.

The Congressional Budget Office estimates that a dollar spent on enforcement activities results in $5 to $9 of increased revenues for the government. To accomplish this, the IRS will primarily go after the big fish, which includes large corporations and the uber rich who use complicated tax schemes to evade taxes. As a tax professional, I welcome a more modern and efficient IRS.

Robert “Butch” Rogers, CPA, Wooster

This article originally appeared on The Daily Record: Letter: Inflation Reduction Act will take aim at large corporations