The “i” Word… and Flag Day

On Friday, the May numbers came in.  Inflation was 8.6% year over year; yes, it went higher.  And the stock market promptly went lower.

There are many factors that make up the CPI – the consumer price index, aka inflation. Here are the particulars:

• Fuel oil – up 75.9% year over year. That’s a new record for fuel oil.

• Airline Fares – up 37.8%. Another new record for airline fares.

  • No other records were set.

• Oddly enough, alcohol is up only 4%.

The headlines are “Inflation is at a four-decade high!” every time the report comes out.  Just to be clear, until it goes past 14.8%, it’s going to be a four-decade high.

• Inflation hit 14.8% in March 1980 and slooooowly dropped down.

  • One year later it was at 10.5% and a year after that it was 6.8.

  • In March of 1983, it was down to 3.6%, a rate that had not been seen since 1973.

• Folks, we’ve had it pretty good these last few years.

• Consequently, it’s time to raise prices for your service/product if you haven’t already. You can only be a non-profit for so long.

On to better news… the federal budget deficit was $66 billion in May, a 50% reduction from last May.

• The main reason is that we are not pumping out Cash for Covid like we were last year.

A little known tax credit for your employees.

• The Saver’s Tax Credit is a tax credit program that will be useful for some of your employees. How?

• It allows a tax credit for 2022 for people that make a contributions to:

  • Traditional or Roth IRA or

  • Pretax contributions to an employers 401k or similar retirement account.

• Depending on the adjusted gross income of the saver, they can get a tax credit for up to half of the money they save, not to exceed $1000.

  • That’s the good news.

• The challenge is that the adjusted gross income for the saver cannot exceed $20,500 for 2022. That’s $10.25/hour for a full time person.

  • Admittedly, this is probably more useful in states other than California, but hey, it’s something.

  • The tax credit does scale down, being eliminated after AGI hits $34,001. It’s a 10% tax credit at that point.

    • Regardless, if they save $2000 in a company 401k, that’s a $200 tax credit.

 Flag Day

• Flag day is Tuesday, June 14.

• When the Revolutionary War started in 1775, the flag that George Washington flew did have 13 alternating red and white stripes. But it had a Union Jack in the corner. Washington did not think it was inspiring to have a replica of the British flag on the colonist’s flag.

• On June 14, 1777, the Second Continental Congress passed a resolution stating that “the flag of the United States be 13 stripes, alternate red and white,” and that “the union be 13 stars, white in a blue field, representing a new constellation.”

• June 14 is one of the days that the American Legion states that you should fly your flag in honor of Flag Day.

  • Interestingly enough, so is Father’s Day.

• If you don’t have one, buy one. It’s that time of year where you can find an American Flag just about anywhere since July 4th is right around the corner.