3 ms·

But there's unprecedented inflation? What am I missing?

philipkglass 3y ago
The article explains that the difference is mostly due to tax changes (hence the "After Taxes" qualifier in the title): This dramatic difference can be attributed to key changes in federal tax policy. In 2022, several policies enacted by the American Rescue Plan Act (ARPA) expired, including an expansion of the Earned Income Tax Credit (EITC) for filers without children and full refundability of the Child Tax Credit (CTC) and Child and Dependent Care Tax Credit (CDCTC). ARPA also increased the maximum amount of CTC. In 2020 and 2021, most households also received Economic Impact Payments (EIP) that were no longer issued in 2022. The rollback of these tax policies had the largest effect on post-tax income among the nation’s lowest-income households. In 2021, for example, post-tax income at the 10th percentile, meaning at the bottom of the income distribution, was 17.1% higher than the corresponding pretax income estimate, reflecting the substantial boost that lower-income households received that year from the EIP and expanded CTC. In contrast, the 2022 estimates of pretax and post-tax income at the 10th percentile were not significantly different (Figure 1).
Rebelgecko 3y ago
Stimmies. As per the article, 2021 was anomalous because more than 25% of people had post-tax incomes that were actually higher than their pretax incomes.
- Supermancho 3y ago
  The line graph shows a huge gap between expectation and resulting income, after taxes. The anomalous part is the expectation change, not the income, as I understand it. The horizontal bar chart is a vertical distribution based on income bracket, not based on aggregate count. The numbers are % change, not a % of total (which would be just under 25%). Where is the 25%+ you are referring to?
NonNefarious 3y ago
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game_the0ry 3y ago
Inflation is a combo of things: - different things inflate at different rates (housing faster than laptops) - corporations pushing pricing for profits - stimulus checks - PPP loan fraud that never had to be paid back - supply chain choke points limiting the supply of stuff - people borrowing aggressively (high credit card and student loans) at low interest rates - student loan forgiveness - government deficit spending accelerating - probably some more I can't think of at the moment Basically, it's complicated.
conductr 3y ago
Policies during COVID was about flattening the curve of the economic reality of massive layoffs/furloughs/etc. I really don’t think we ever broadly talked about what should have happened to the economy in that situation.
SubiculumCode 3y ago
This article is about the number of dollars in pre and post tax income. It has nothing to do with how much you can purchase with those dollars.
RhodesianHunter 3y ago
"Real Income" is inflation adjusted.

The article explains that the difference is mostly due to tax changes (hence the "After Taxes" qualifier in the title): This dramatic difference can be attributed to key changes in federal tax policy. In 2022, several policies enacted by the American Rescue Plan Act (ARPA) expired, including an expansion of the Earned Income Tax Credit (EITC) for filers without children and full refundability of the Child Tax Credit (CTC) and Child and Dependent Care Tax Credit (CDCTC). ARPA also increased the maximum amount of CTC. In 2020 and 2021, most households also received Economic Impact Payments (EIP) that were no longer issued in 2022. The rollback of these tax policies had the largest effect on post-tax income among the nation’s lowest-income households. In 2021, for example, post-tax income at the 10th percentile, meaning at the bottom of the income distribution, was 17.1% higher than the corresponding pretax income estimate, reflecting the substantial boost that lower-income households received that year from the EIP and expanded CTC. In contrast, the 2022 estimates of pretax and post-tax income at the 10th percentile were not significantly different (Figure 1).

Rebelgecko 3y ago

Stimmies. As per the article, 2021 was anomalous because more than 25% of people had post-tax incomes that were actually higher than their pretax incomes.

Supermancho 3y ago
The line graph shows a huge gap between expectation and resulting income, after taxes. The anomalous part is the expectation change, not the income, as I understand it. The horizontal bar chart is a vertical distribution based on income bracket, not based on aggregate count. The numbers are % change, not a % of total (which would be just under 25%). Where is the 25%+ you are referring to?

NonNefarious 3y ago

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game_the0ry 3y ago

Inflation is a combo of things: - different things inflate at different rates (housing faster than laptops) - corporations pushing pricing for profits - stimulus checks - PPP loan fraud that never had to be paid back - supply chain choke points limiting the supply of stuff - people borrowing aggressively (high credit card and student loans) at low interest rates - student loan forgiveness - government deficit spending accelerating - probably some more I can't think of at the moment Basically, it's complicated.

conductr 3y ago

Policies during COVID was about flattening the curve of the economic reality of massive layoffs/furloughs/etc. I really don’t think we ever broadly talked about what should have happened to the economy in that situation.

SubiculumCode 3y ago

This article is about the number of dollars in pre and post tax income. It has nothing to do with how much you can purchase with those dollars.

RhodesianHunter 3y ago

"Real Income" is inflation adjusted.