After more than a year of endless debate about costs, taxes, tax breaks and regulations, US President Joe Biden is finally able to show his aunt's smile.

Biden signed the 2022 inflation reduction Act (Inflation Reduction Act) on Tuesday, August 16, EDT, bringing the legislation into effect. The bill is a "shrunk version" of the $1.75 trillion rebuilding a better Future Act pushed by Biden last year.

The bill claims to increase revenue by $740 billion and government spending by a total of $430 billion for energy, climate change and health subsidies, of which $369 billion will be spent on climate change and clean energy.

The White House says Biden will travel across the country in the coming weeks to clarify how the legislation will help Americans. Biden will also hold an event to celebrate the enactment of the legislation on September 6. The White House said:

This historic legislation will reduce energy, prescription drugs and other health care costs for American households, deal with the climate crisis, reduce deficits, and enable large companies to pay a fair share of taxes.

The bill focuses on five major areas, with a focus on climate investment, focusing on clean energy manufacturing, including solar panels, wind turbines, batteries, electric vehicles and key minerals. The $369 billion bill also makes it the largest climate bill in US history and aims to reduce US carbon emissions by 40 per cent by 2030.

Not only is it larger and lasts longer, the 30% investment tax credit available for photovoltaic projects is extended by 10 years; the proportion of financial support for project costs is also higher, such as green hydrogen subsidies up to 50% of production costs. it will also stimulate the outbreak of other clean energy industries such as electric vehicles, energy storage, carbon capture and wind energy.

In addition to energy security and climate investment, the legislation allocates $64 billion to subsidies under the Affordable Care Act, limiting out-of-pocket drug costs for the elderly to $2000 a year. At the same time, the legislation allocates $80 billion to strengthen IRS enforcement and to ensure that high-income individuals and companies do not evade taxes. In addition, the legislation includes a 1 per cent consumption tax on share buybacks.

In addition, the White House says the legislation will reduce the government's budget deficit by about $300 billion over the next decade. It is reported that the $437 billion spending plan covered by the bill is expected to raise $737 billion over the next decade, with the largest share coming from cuts in drug prices for Medicare beneficiaries and tax increases for companies; about $124 billion is expected to come from IRS enforcement, which means more stringent and frequent audits of the rich.

Of course, the biggest impact of the tax increase is mainly on about 150 large high-income companies, with technology giants bearing the brunt. As many large American companies currently pay very low federal taxes, the bill will significantly increase the tax burden on these companies. The new repurchase tax could force such companies to abandon their share buyback plans in the short term, putting some pressure on their share prices.