by Brian Balfour
Senior Vice President of Research, John Locke Foundation
As negotiations continue on President Biden’s budget-busting infrastructure (and more) spending plan, one thing has remained constant: Biden’s promise to not raise taxes on anyone making under $400,000.
But as anyone buying gas, groceries, or virtually anything else could tell you, we are already paying a steep tax: the inflation tax.
Price inflation eats away at the purchasing power of your dollars, the same amount of money now buys you less. In the same way that an income tax reduces your purchasing power by reducing your take-home pay, inflation reduces your purchasing power by devaluing the dollars you have.
Indeed, annual inflation in September rose at the fastest rate in 30 years. The rise in prices was accompanied by a 1% decline in personal income.
Specifically, the sharpest rises in price occurred in common items that disproportionately harm low-and middle-income households:
And it’s only going to get worse. For instance, some experts are predicting a rise in energy bills of up to a stunning 54% this winter.
Passing massive, multi-trillion dollar spending plans will require even more money printing, which will continue the runup in prices and increase the inflation tax on working Americans.