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MSEC: The Inflation Reduction Act Fails to Address the Challenges Facing Main Street

“The Main Street Employers Coalition – comprised of national trade groups representing individually and family-owned businesses employing millions of Americans in every state – believes the “Inflation Reduction Act” would fail to address the major challenges confronting Main Street today: high inflation, a slow economy, and a tight labor market.

“Recent NFIB member surveys make clear that inflation is the number one concern for Main Street businesses right now. With the CPI and PPI indexes measuring forty-year highs, businesses are struggling to balance rising prices with the need to accommodate their customers. A recent analysis from Penn-Wharton, however, finds the Inflation Reduction Act would increase prices in the short term and do little to bring them down in the long term.

“The legislation also provides the IRS with $80 billion in additional funding over the next decade. Its sponsors argue the funds will enable the agency to go after tax cheats and close the so-called tax gap, but Main Street knows better. More than half this funding will pay for new agents and increased audits, and the IRS has been transparent the primary target of these audits will be smaller private businesses. Meanwhile, only four percent of the funding will go to improving customer service, a long-term priority for Main Street.

“This is not a case where only tax cheats need to worry. Any business that has undergone an audit knows the cost and stress the process can impose on a business, even when no taxes are ultimately owed. The Tax Code is dense and ambiguous, so law-abiding businesses are at risk from this massive fishing expedition.

“Main Street faces numerous challenges in the current environment, but none of these are addressed in the Inflation Reduction Act. The bill will increase prices in the short term and increase the costs of complying with the Tax Code.”