Why Democrats’ Inflation Is A Major Tax Hike On The Poor
At a time the wealthiest Americans have gotten even richer due to booming times on Wall Street, pernicious inflation would give working families a crushing blow.
By Christopher Jacobs
May 26, 2021
President Biden claims he won’t raise taxes on families making less than $400,000 per year. But given Biden’s twists and turns on taxes—he now wants to eliminate a loophole he and his wife exploited to avoid more than $500,000 in taxes the past four years—Americans have reason to take his campaign promises with a grain of salt.
Even if he does not levy taxes on middle-class families directly, Biden’s free-money policies are beginning to impose a heavy indirect tax increase on families of modest means: Rising inflation. At a time the wealthiest Americans have gotten even richer due to booming times on Wall Street, pernicious inflation would give working families a crushing blow.
Prices of Goods SkyrocketingA recent Labor Department report noted that in April, the Consumer Price Index rose 4.2 percent on an annual basis compared to April 2020. From March to April of this year, prices rose at a 0.8 percent rate, which equates to roughly 10 percent inflation over an entire year. Both the annual and the monthly increases in April significantly exceeded the Federal Reserve’s 2 percent inflation benchmark.
The Federal Reserve considers this spike in inflation “transitory”—a true enough statement, to a point. Some of the price spikes stem from anomalies due to the pandemic.
For instance, this time last year, oil prices tanked when much of the global economy shut down; that sharp spike downward last year will look like a big spike upward this year, as prices move toward higher, pre-pandemic levels. Other price increases could stem from pandemic-related supply chain issues—for instance, the global chip shortage—that may resolve themselves as things return to normal.
But rising prices could also develop into a longer-term phenomenon. The trillions of dollars that the Federal Reserve continues to pump into the economy, coupled with trillions of dollars of federal spending pushed by Biden and congressional Democrats, could let the inflation genie out of the proverbial bottle, leading to sustained price increases.
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https://thefederalist.com/2021/05/26/why-democrats-inflation-is-a-major-tax-hike-on-the-poor/
