To pay for historic climate investments, the legislation that passed the Senate on Sunday imposes a 15% minimum corporate tax and a 1% tax on stock buybacks.
Companies that pay low effective tax rates — such as health care and technology firms — would see a bigger hit, the bank said.
Overall, Goldman Sachs said the net fiscal impact of the Inflation Reduction Act “look very modest,” translating to less than 0.1% of GDP over the next several years. That’s because the new spending and new taxes “roughly offset,” the bank said.
The findings stand in contrast with warnings from some major business trade groups that have argued the new tax provisions will backfire.
“Imposing more than $300 billion in tax increases during a downturn is the wrong policy at the wrong time,” Business Roundtable CEO Joshua Bolten wrote in the statement, noting that the US economy has faced two consecutive quarters of declining GDP and “remains at risk of a protracted economic decline.”
The American Petroleum Institute, the biggest oil and gas trade group, said over the weekend it is “encouraged” by the bill’s extension and expansion of carbon capture tax credits and provisions on onshore and offshore lease sales.
However, the API said much-needed permitting reform is “glaringly absent” from the bill, and criticized its tax provisions.
