Opinion | Scott M. Estill: Hello inflation inequality
Challenges, Choices, Changes
Now that we are a few months into 2022, it seems that many employees are finally starting to see an uptick in their earnings. It has been estimated that wages will rise about 3.2% this year, higher than the typical 1% to 2% increase in the recent past. It’s about time. The problem though is that prices are rising much faster than wages are increasing. In fact, you would have to go back to President Jimmy Carter 40 years ago to be able to match today’s 7.48% inflation rate.
If you have $1,000 to save and put it in a one-year certificate of deposit, the best you could receive today is 1%. One year from today you would have $1,010 in your account ready to spend. Yet with inflation, it would cost you $1,078 to buy the same goods one year from today, and this assumes inflation does not get any higher, which I definitely would not bet on. In effect, inflation has taxed this person trying to save for the future in that they actually have $68 less to work with than they did at the opening of the account. Saving money didn’t pay off.
If beef is for dinner, it will cost you 16% more than last year. Eggs and bacon are up around 14%. Food in general is rising faster than at any time since 1981. Gasoline and electricity costs about 28% more than it did last year. Does anyone really think that prices at the pump will not continue to increase as long as Comrade Putin is calling the shots? The prices of new cars are rising about 1% per month, while used cars are rising about 3.5% per month. Not surprisingly, this is the fastest rise in U.S. history.
You get the picture, and it isn’t pretty. But then again, we don’t need an economist to tell us that the prices at the City Market are higher than they used to be. The real question though is who really pays for all of this current, and future, inflation? Unsurprisingly, the answer falls squarely on the shoulders of the working class, or the “little people,” as Leona Helmsley once famously stated while she was charged with and convicted of criminal tax evasion.
The dude who paid $1,275,000 for a 752-square-foot, one-bedroom condo at One Ski Hill Place in Breckenridge doesn’t really care if a pound of ground beef costs $2 more anytime soon — or if another dollar or two is added to a gallon of gas. It makes no real difference to the wealthy. And as I have written before, Summit County is currently structured to be a playland for the upper-income folks. It is a real-world example of income inequality at work.
From the start of the pandemic to October 15, 2021, the wealth of U.S. billionaires increased 72%. Not bad, but why not aim a bit higher? If you happen to fall within the top five, and your last name happens to be Bezos, Gates, Page, Musk or Zuckerberg, your 123% increase would have resulted in a combined increase of $430 billion. While the money would be nice, having to spend any time with the names on the list sounds nothing but creepy to me. Nevertheless, a bit of perspective: the money they “earned” during the pandemic could buy 215,000 homes priced at $2 million each. This would be without touching their combined $349 billion stash they had accumulated at the beginning of the pandemic. Seems like a real good deal. For some. A few. Maybe five.
If you are earning wages and actually working for a living, as opposed to investing for passive income, you are paying for the inflation and the spiral of the rich continuing to get richer. An unmarried employee earning $100,000 per year in Dillon could expect to pay a tax rate of up to 36.15% (24% to IRS, 4.5% to Colorado and 7.65% to Social Security and Medicare) on their wages. If you added several zeroes to the amount of income that a mere billionaire could receive this year, the actual tax rate actually would go down to 28.3% (23.8% to IRS and 4.5% to Colorado), as dividends and capital gains are in play with tax planning rather than wages.
To say the system is rigged is an understatement. But what can you do about it? Obviously, change the tax code would be a good place to start. But let’s be realistic. Several thousand pages of complex tax laws were not written by overpaid lawyers for the benefit of the so-called “working class.” Many of the people who paid these lawyers are also paying those who write and pass the laws in Washington D.C. Good luck!
The only real change will occur at the local level. On this point, it seems as though all of the current Summit Daily News opinion writers like me agree. The solutions, though, vary from “let the market take care of it” all the way to “the government should fix it” to everything in between. The “it” of course varies depending upon the issue. While you likely cannot change the federal or state tax code on your own, you can voice your opinion concerning how much real estate and retail sales in Summit County gets taxed, who pays the taxes and how the money will be spent. Take advantage of this opportunity to speak up and make your views known. It’s what the 43,476,153 citizens of Ukraine are fighting for this very moment.
Scott M. Estill’s column “Challenges, Choices, Changes” publishes biweekly on Thursdays in the Summit Daily News. Estill is an attorney, author and public speaker who lives in Dillon when not traveling or attending to legal matters in Denver. Contact him at email@example.com.
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