DENVER (KDVR) — Every Coloradan who paid taxes this year will receive $400 thanks to the Taxpayer Bill of Rights, but how they choose to spend that money may be different from stimulus spending during the pandemic.
“Our economy is much better now than two years ago because our unemployment is really low, people are finding jobs,” Kishore Kulkarni, a professor of economics at Metropolitan State University of Denver, said.
The one factor not present during a time of national stimulus in 2020 and 2021 is inflation. The inflation rate in the Denver metro has grown higher than the national average this year and is one of the highest rates in the country.
“Inflation is eating away some of our income and for our real income, is not growing as fast as our money income is,” Kulkarni said.
When looking at the economic factors of the stimulus period, spending typically correlated with the income bracket of the individual.
“Certainly poorer folks will rush to the grocery store and buy more groceries, necessities, And the middle income will probably do half of that. And the rich will say ‘Oh it’s only $1,000 for me, I will probably stuff it into the savings account,'” Kulkarni said.
When contrasting the high inflation in 2022 to the past two years, the TABOR tax rebate is even less significant, compared to stimulus checks delivered during a time of low inflation, according to Kulkarni.
“Overall to the economy, the effect is not going to be that great, because as I said, that inflation is really making the $400 to $300 or $350,” Kulkarni said.
Kulkarni said that while giving more Coloradans spending money may have an impact on inflation and the economy, for the big picture the long-term impact may be minimal. However the short-term impact matters for working and poorer families that need the money to get by.
“The short-term effect is probably an increase in consumption, travel-related gasoline, the high-priced items in the grocery store, meat is getting out of hand now,” Kulkarni said. “Some of the high-priced items will eat away that $400 in a very fast time.”
When it comes to the summer season, Kulkarni said we generally tend to spend more on trips, gasoline, hotels and travel-related expenses. He expects prices to continue to rise and inflation to get worse as spending increases.
But when it comes to these TABOR rebates, he doesn’t believe that will noticeably fuel more inflation in the fall.
“Inflation is not out of hand because everybody got $400, that’s just not the reason,” Kulkarni said. “The major reason why inflation is so high is our money supply has increased over the last two years by a tremendous number.”