Opinion | Scott M. Estill: Average is no longer affordable | SummitDaily.com

Opinion | Scott M. Estill: Average is no longer affordable

The 2022 real estate numbers have been released and if you would like to buy the “average” house in Summit County, you will need to spend just over $1.3 million. Just a short decade ago, this number was $497,056. For the “average” person who bought this “average” home in 2012, you are now sitting on a tidy profit of more than $800,000.

But the numbers can be deceptive, especially considering that the average (mean) sales price is often skewed by the ultra-expensive homes, including 14 that currently are for sale in Breckenridge that top $10,000,000. When they sell this year (and they will), these astronomical sales prices will distort the results. Yet, by looking at the median home price in 2022 (the middle number in a set from smallest to largest per my middle-school math memory), we are still obscenely high: $940,000

Breaking these numbers down one step further shows that if you were looking for housing that cost less than $500,000, good luck. Less than 10% of all sales were for less than $500,000. Amazingly, just two years ago, 27% of all sales were less than $500,000.

The average American’s wages have increased by about 37% in the last decade, while the cost of a home has more than doubled. And while you may be one of the lucky ones whose income has increased more than the average, the housing prices here in Summit County have almost tripled during this same time period. To say this is unsustainable would be a vast understatement.

In order to afford the median home in Summit County, you will need to have saved at least $100,000 and be able to take on a mortgage of $840,000. The mortgage will set you back about $5,300 per month. Of course, taxes and insurance are extra. If your monthly income is around $18,000 per month, congratulations as you can now afford the average residence in Summit County!

How did we as a country get to the point where the middle class cannot afford home ownership, which is increasingly a rich person’s opportunity? This is certainly the case here, as we live in a wealthy, tourist-heavy county. But it’s also a national problem. In 1989, the average CEO made about 61 times the wages of an average worker at the company. Now, this number is 320. From 1978 to 2019, compensation grew 14% for the average employee. For CEOs, it rose 1,167%.

Want to run Microsoft? The job paid just over $54.9 million in 2021, or about $150,000 for each of the 365 days of the year (assuming no time off). This salary didn’t even make the top 10. And don’t feel too sorry for Elon Musk and Warren Buffet, two at the bottom of the Fortune 500 CEO compensation list. While they received little or no salaries, they did manage to bring in enough money to feed their families. They also were smart about taxes. For folks like Elon and Warren, they pay no more than 23.8% of their income to Uncle Sam.

The top person on the list is the CEO of Expedia, who managed to survive on slightly more than $292 million, or about $33,333 per hour for every single hour in 2021 (no doubt he worked 24/7). He also paid a lot in taxes, as most of this income would be taxed at 37% (he has no income tax in the state of Washington where Expedia is headquartered). This assumes, of course, that he does not possess any Trump-sized losses on bad business deals or non-performing real estate.

The income disparity and inequality here is an issue in which those who wear red or blue political hats can come together. No matter your opinions on the many social issues driving a wedge in the country, most of us agree that the pay disparity gap is unsustainable going forward. Someone we should be listening to is the Rev. William Barber II, who has argued that a fusion of diverse groups such as people of color, immigrants, the poor, working-class whites, and other historically discriminated against groups needs to band together to create a more level playing field.

In the meantime, the tax code should be immediately adjusted to tax executive compensation if it exceeds a certain ratio (50-100 times average employee pay is often used in proposed changes) by denying the business a tax deduction for the excess compensation. It’s easy. If the company pays $53,490 (the average U.S. wage in 2022) and the formula used a 100 times factor, the CEO could be paid $5,349,000 without any tax issues for the company. For every dollar that the CEO got paid over this amount, the U.S government would receive 21 cents in extra income tax. For the CEO, there would be a strong incentive to see that the average employee was paid more, if for no reason other than the greed factor that they will get paid more as well.

In addition, changing the rules on the way some income is taxed (including carried interest) and limiting the ability of businesses to repurchase shares of its stock would also rein in the extreme examples we are seeing today. These are simple solutions that both political parties should rally behind, as they benefit the vast majority of voters and reduce the deficit by bringing in easy, untapped tax revenue. Who besides the 1% will complain (he says, forgetting that the 1% have all 535 members of Congress on their payrolls)? We talk a lot about a minimum wage and what that should be. We should really be discussing a maximum wage and what that should be.

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