As accountants, tax preparers, and business consultants, we have seen first-hand the varying degree of Covid relief that both individuals and businesses have received over the last 14 months from the Federal Government. It is astonishing to see the variance of unequal distributions based on the federal regulations put forth.
Businesses were eligible to apply for low-rate interest loans; however, in addition to that some of them also received millions of dollars in Covid relief which will not be taxable, nor will much of it be required to be paid back. While some of these businesses needed assistance to stay afloat, due to loose regulations, other businesses not as directly affected received this free funding (that wasn’t always necessary for certain businesses to remain viable) in what some would interpret as a bonus for being a business entity. In the meantime, individuals making over $75k/year and families over $150k/year literally qualified for nothing. This inequitable distribution (in our opinion misappropriation of funds) in large part was due to extremely poor planning on the part of the government.
In 2020 alone more than 3 trillion dollars were printed, which accounts for 20% of all U.S. currency in current circulation. This action in short devalued the dollar which directly reduces the value of savings accounts without changing their balances. With this forced inflation we have seen the costs for everyday goods such as beef, chicken, dairy, fruits, and vegetables increase 40-60% over pre-Covid prices, gas prices are on the rise, and lumber is at an all-time high at as much as 400% increase. The latter has driven the cost of home building so high that new homes are being priced out of reach, which in turn has caused existing housing market prices to soar to unbelievable levels. What many do not realize yet is this will directly cause their property taxes to increase causing their monthly mortgage escrow payment to skyrocket. Regardless many are pulling their money out of the market and investing into hard assets to offer more protection than the devaluing currency represented in the stock market.
To date the Federal Government has dispersed 7.7 trillion dollars in Covid relief funds, and if divided equally amongst the U.S. population of 331.5 million people, each person would have received roughly $23k (this includes minors as part of the population count). With that said, most of the middle-class working America (who retained their jobs) does not qualify for the Covid relief funds, nor do they qualify for any other government provided assistance programs. The middle class is not feeling the effects of Covid any less than those families who’s income is less than $150k. If your last year’s tax return reflected above $150k, then you are punished for your hard-working earnings. So, where is the help for the middle class, especially considering they pay approximately 37% of the income taxes collected in this country. It doesn’t’ exist and the economy will feel the effects of the 37% absence going forward.
In Summary, when and where is the assistance for the middle-class working Americans going to happen and come from? Stay tuned……