The middle class, which can be referred to as 'petit bourgeoisie,' used to be the fate of the better educated or more successful small business owners within a population. Falling between the working class and the upper class in a population, the middle class is more likely to own a house (although with a mortgage), own a car (although with a loan or lease), and send their children to college (although making use of student loans or scholarships). The middle class may not be the symbol of luxury, but the common man found it satisfactory as it provided stability in income and comfort.

With the ever-increasing wealth of the top 1%, the definition of 'middle class' has begun to change due to the disappearance of the true middle class. Middle class is now a term that is used to describe the upper end of the working class and is further divided into the upper middle class and the lower middle class.

Many circumstances are responsible for the gradual disappearance of the true middle class, but the impact of certain essentials on their wealth seems to deal the biggest blow. The increase in property taxes and the steady inflation of home insurance continue to drill holes in the pockets of the common man and, if left uncontrolled, could have a lasting impact on the socioeconomic hierarchy.

The inflation of property insurance is a national problem, as the United States saw an 11% increase in home insurance costs over the past year, but this insurance rate can vary by state or location. The state of Texas saw a 23% increase in inflation rates over the past year; this is more than double the national average, and the reasons for this spike are far from unknown.

Natural disasters play a huge role in regards to home and property insurance. According to the National Oceanic and Atmospheric Administration, between the years 1980 and 2023, Texas experienced an average of 3.9 natural disasters per year, including 19 drought events, 9 flooding events, 1 freeze event, 122 severe storm events, 14 tropical cyclone events, 7 wildfire events, and 11 winter storm events, each totaling over 1 billion per event, but this statistic does not even paint the full picture. In the year 2023 alone, Texas experienced 16 natural disasters, and between the years 2019 and 2023, the state suffered an average of 11 billion dollars in losses to these events each year.
Karen Collins, vice president of property and environmental for the American Property Casualty Insurance Association, stated that “the increasing frequency and severity of natural disasters in recent years has caused record-breaking natural disaster losses.” The losses accounted for by these natural disasters have led to a number of policy reforms and have also caused insurance companies to calculate risk and increase rates of their insurance in order to avoid complete losses.
States in more hurricane- or disaster-prone areas have a higher tendency to pay more for premium insurance. Florida has the highest annual premium fee in the country at $5,533, Nebraska pays the second most at $5,249, and Oklahoma is not far behind at a whopping $4,700. The lowest premium rate in the country is offered in Vermont, with an annual rate of $806. The disaster-prone state of Texas is on a higher end due to reasons earlier discussed, with a rate of $3,726 per year.

The values for these premium insurances vary this highly due to differences in policies in different states. In states like California, insurance companies have to seek state permission before increasing insurance rates; this is wildly different in the state of Texas. In states like Texas, insurance companies file for an increase in insurance rates and increase their rates simultaneously before their request has been approved. This file-and-use strategy is overseen by a public insurance counsel in charge of approving these rates if they deem it fair for the consumer. This counsel analyzes the insurance company's risk rate and loss rate before giving their approval.

Some insurers are also protected by the Texas Fair Plan. This plan issued its first policy in 2002: the insurance reform bill, which made it hard for individuals to know what they are insured for. The insurance reform bill allows carriers to set their own deductibles and exclusions rather than writing a standardized policy. This plan was put into action because Farmers threatened to pull out of Texas completely and would leave multiple individuals uninsured.

Like property insurance, the increase in property tax is a major contributor to the depreciation in the wealth of the middle class. Property tax on its own is a necessity, as it is the backbone of local governments, but regulating the inflation of these taxes is key to maintaining the wealth and comfort of the common man.

As shown by the Institute on Taxation and Economic Policy, property taxes are often a much greater burden on lower-income and middle-class families as compared to wealthier households. In 2018, the poorest 20 percent of taxpayers paid 4.2 percent of their income on property taxes, compared to 3 percent of income for middle-class taxpayers and only 1.7 percent of income for the wealthiest 1 percent of households. A study from the Center for Municipal Finance found that this unequal distribution of tax burdens could be a result of or partly due to affordable properties being valued above their true market value, while expensive or luxurious properties being accessed below their true market value.

Conclusion

Over the past few decades, there has been a growing gap between the top 1% and everyone from the middle class and the working class. This gap will only worsen if the necessary measures to regulate taxation and inflation are not taken. The world is built on the working man; hence, ensuring the happiness and comfort of the common man is a necessity to maintain an economy and grow a nation.

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