78-09-B6
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Inflation[edit]
Transcript[edit]Not long ago I gave a figure on one of these broadcasts about what a tankful of gasoline would cost five years from now if we continue the rate of inflation we've had for the last five years. Right now a tank of regular runs about $13.28; five years from now it could be $24.16. That line from a broadcast I did on energy started me thinking about what other items in our daily living might cost if we don't use common sense and end inflation before it ends us. A $50.00 shopping cart of food, for example, will cost $77.00. I should point out that while we have a cost-of-living index, not all items makin g up that index increase at the same rate. Gasoline went up 82% in the last five years and food went up 54%. A new house at $55,000 today will cost $89,600 in five years. In Los Angeles or Washington, D.C., you'd have to multiply those figures quite a bit. A $5,000 car will be $6,875. A year in college will go from $5,200 to $7,740. But the most telling figures have to do with how our earnings must increase in order to maintain the same level of living we had five years ago and today. I've done some broadcasts on how much our taxes increase every time we get a cost-of-living increase, so the salary figures I'm going to give you are for maintaining your buying power after you've paid your federal taxes. There is, of course, no way to project local and state taxes because they vary from town to town and state to state. If you were making $5,000 a year five years ago, you have to be earning $7,011 today to have the same buying power after you've paid your federal taxes. If we continue inflation at the same rate for another five years, you'll have to be making $11,108. Now if the federal income tax were indexed to allow for inflation, we could simply multiply to get the figures for other levels of earning. But the tax isn't indexed, so that won't work. You're going to move up into higher surtax brackets. If your income was $10,000 in 1973, it has to be $14,601 today to keep even, and five years from now it must go to $22,530; that's $422 -- more than double the figure for the $5,000 income. At $15,000 in 1973, you must be earning $22,452 today , and if inflation continues, $35,280 in 1983. Were you in the $20,000 a year range in 1973? Well, if you aren't earning $30,195 today, you are worse off than you were then and you'll have to earn $48,056 five years from now. $25,000 in 1973 calls for $38,211 today, and $61,744 in 1983. Let's jump up to that standard of affluence, the $50,000 income. If you were making that in 1973, it has to be $79,463 now and -- brace yourself -- $124,038 five years from now. As an example of the part the federal income tax plays, inflation over the ten years amounts to 65 percent. But you have to increase your earnings 150% to stay even at a six-and-a- half percent annual inflation rate. Those are some of the prices we pay because the federal government continues to spend more than it takes in. This is Ronald Reagan. Thanks for listening. |
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