Household Income Fell 8.8%
This is a summary of the article titled "Household Income Fell 8.8% as Home
Prices Rose" by Kerry Smith discusses the following key points:
1. **Decline in Household Income:** In 2022, real median household income after taxes in the United States fell by 8.8% compared to the previous year. This drop in income is attributed, in part, to factors such as the expiration of pandemic-related checks and tax credits for childcare.
2. **Poverty Rate Increase:** The article highlights that the poverty rate, as measured by the Supplemental Poverty Measure (SPM), increased significantly by 59% to 12.4% during the same period. The SPM accounts for post-tax income and provides a different perspective on poverty compared to the official poverty measure.
3. **Tax Policy Impact:** The article notes that the decline in post-tax income was more pronounced than the decline in before-tax income, with before-tax median household income decreasing by 2.3%. This difference is attributed to changes in federal tax policy, particularly the expiration of certain provisions of the American Rescue Plan Act (ARPA).
4. **Expired ARPA Policies:** Several policies from the American Rescue Plan Act that were enacted in response to the COVID-19 pandemic expired in 2022. These included expansions of tax credits such as the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and Child and Dependent Care Tax Credit (CDCTC). Economic Impact Payments (EIP) that were issued in 2020 and 2021 were also no longer issued in 2022.
5. **Impact on Income Inequality:** The rollback of these tax policies, particularly for lower-income households, contributed to increased income inequality. While the Gini index, a measure of income inequality for pretax income, decreased slightly, the post-tax Gini index increased among lower-income households due to substantial declines in post-tax income.
The article underscores the significant economic changes that occurred between 2021 and 2022, with a notable drop in household income, an increase in poverty rates, and changes in income inequality, all of which may have implications for the housing market, especially considering the rising home prices mentioned in the title.
Please note that this is a summary of the article's content, and for more detailed information and context, you may refer to the original article by Kerry Smith Florida Realtore
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