USA finance and payments: news summary 26 April
Finance, benefits and tax info: latest news
Headlines: Tuesday 26 April 2022
- Congress has returned from recess to take up Biden spending proposals.
- Maine has passed a budget which will give residents $850 to deal with inflation.
- Tesla has $126 billion wiped off of market value.
- Crude oil stays below $100 over fears of possible Beijing lockdown while the price of gas inches up to $4.13 on average in the US.
- Average mortgage interest rates hit 5.1 percent, forcing many to revise their housing market projections for 2022.
- Full student debt cancellation has not been proposed, but the White House has cancelled some borrowers' debt. Who is affected?
Helpful links & information
- What are the nine states that do not pay income tax and why?
- Missed the tax deadline? These are the penalties to be aware of.
- Can federal student loans be forgiven after 10 or 25 years?
- Stimulus checks can still be claimed, if you haven't received the federal payments.
South Africa-born Elon Musk is not oft out of the headlines, and his recent acquisition of Twitter has brought the world’s attention upon him again. It is costing him around $44 billion, or just under one-fifth of his total wealth.
Coming from the humble background of emerald mine owners, Musk made his early break in software companies such as Zip2 and Paypal, before taking the plunge into some huge business ventures such as Tesla and SpaceX
Tesla takes 12.2% hit over Musk Twitter funding fear
(Reuters) - Tesla Inc lost $126 billion in value on Tuesday amid investor concerns that Chief Executive Elon Musk may have to sell shares to fund his $21 billion equity contribution to his $44 billion buyout of Twitter Inc.
Tesla is not involved in the Twitter deal, yet its shares have been targeted by speculators after Musk declined to disclose publicly where his cash for the acquisition is coming from. The 12.2% drop in Tesla's shares on Tuesday equated to a $21 billion drop in the value of his Tesla stake, the same as the $21 billion in cash he committed to the Twitter deal.
Cryptocurrencies continue to be a promising investment for many. They need a lot of energy to be stored and mined, meaning they can only really be mined in nations or areas with a low electricity cost. Though this is getting harder to find as of the rising price of energy, there remains various places which are favourites fo prospective crypto-miners.
What have economists said about the World Bank report?
Households across the world are feeling the cost of living crisis... We're particularly worried about the poorest households since they spend a larger share of income on food and energy, so they're particularly vulnerable to this price spike.
World Bank predicts huge economic shock from Ukraine war
The World Bank has published a report conceding that the world is to face some of the most testing economic circumstances in 50 years. It says there will be "the largest 23-month increase in energy prices since the 1973 oil price hike", in which tensions in the Arab Gulf states caused rapid increases in the price of fuel.
Energy prices are set to increase more than 50 percent, pushing up bills for households and businesses, the report says.
Tax relief assessed for property
Ann Johnson, Representative for Texas House District 134, is supporting Propositions 1 and 2, which is up for a vote in the May 7th Constitutional Election.as she believes that everyone deserves property tax relief.
Cutting taxes: what's happening in PA?
The Pennsylvania House Democratic Caucus shares more details on their PropelPA plan that cuts taxes on the businesses that they say create better jobs and build better communities.
This includes cutting business taxes from 9.99% to 6.99% and supporting high-tech startups.
Every month the Social Security Administration (SSA) sends out payments to retirees, the disabled, and plenty more groups who are eligible. At the end of 2021, over 67 million beneficiaries received some form of financial support from the Social Security Administration, over 72 percent were retired workers.
We continue to receive questions about the approval process, so have pulled together this guide.
Elon Musk and Bill Gates have clashed over approaches to the covid pandemic, the effectiveness of vaccines, death tolls, the space race, electric vehicles...
AS' Laura Martín Sanjuan on the tycoons' difficult relationship
Musk Twitter takeover shaping up as "real business risk" for Tesla
The Guardian's financial editor, Nils Pratley, has taken a look at how Elon Musk's Twitter takeover affects Tesla - whose share price are down by 11% today, amid speculation Musk will have to sell off shares in the company to finance the deal.
"Tesla’s shareholders don’t have a voice in the Twitter deal, and it’s safe to assume that the Musk fan club that is the company’s non-executive directors won’t provide a squeak of protest," Pratley writes. "But, by rights, the Tesla brigade should hate the new deal. At best, it is a distraction for them; at worst, it is a real business risk.
Having an outstanding bill with the taxman can lead to penalties and interest accumulating, so taking care of it is an urgent matter.
What will Elon Musk's takeover mean for Twitter employees?
CNBC’s Morgan Smith has taken a look at what Elon Musk’s takeover of Twitter could mean for employees of the social-media platform. Drawing on Reuters and Bloomberg accounts of a Q&A between Twitter employees and CEO Parag Agrawal on Monday, Smith notes that Agrawal has said lay-offs are not expected “at this time”. Asked about a potential hiring freeze, meanwhile, Agrawal reportedly said: “We don’t have all the answers - this is a period of uncertainty.”
Americans who missed tax-filing deadline may be able to avoid fine - IRS
Taxpayers who missed the deadline to submit their 2021 federal income tax return - for most filers, this was 18 April - may be able to avoid being hit with a fine, the IRS says. The agency is encouraging Americans who failed to file their taxes or get an extension by the due date to check out its First Time Penalty Abatement.
Find out more about the First Time Penalty Abatement on the IRS' website
There have been three federal stimulus checks in the United States since the outbreak of the coronavirus pandemic just over two years ago. Sent out under two administrations, the checks - officially known as Economic Impact Payments - have seen eligible Americans receive a maximum of $3,200, plus additional credits for qualifying dependents.
AS USA takes a look at each payment: when was it sent out, how much was it, who was eligible?
To help residents “grappling with the increased costs as a result of pandemic-driven inflation,” the Maine legislature has passed a budget that includes relief checks for Mainers.
Workers at second Amazon warehouse to vote on unionizing
Amazon associates at Amazon warehouse JFK8 recently voted to unionize, the first one in the nation. A second New York area Amazon warehouse will decide whether they will join the Amazon Labor Union.
With interest in unionizing being expressed by Amazon workers at over 100 other US worksites, success or failure of the vote will influence those efforts. As well, Amazon is contesting the results of the JFK8 vote before the US National Labor Relations Board. In an attempt to depress the vote, the company is telling workers that unions cannot guarantee better pay or benefits.
If Jeff Bezos can afford a $500 million yacht and fancy multimillion dollar homes all over the world, you know what? He can afford to pay workers at Amazon decent wages, decent benefits, and provide good working conditions.
Biden to give access to housing, loans and jobs to formerly incarcerated
The White House announced on Tuesday that it is allocating $140 million toward developing reentry plans for incarcerated persons. "America must offer meaningful opportunities for redemption and rehabilitation to empower those who have been incarcerated to become productive, law-abiding, members of society and reduce crime and make our communities safer," the statement read.
In his bid for the presidency in the 2020 campaign, Biden pledged to tackle criminal justice reform. This latest effort will provide second chance opportunities by connecting the formerly incarcerated to resources, such as jobs, housing and loans upon being released. "In doing so, we can break the cycle of crime, and allow law enforcement to focus their time and resources on the most pressing threats to public safety."
SNAP provides financial support to low-income individuals and families who are having difficulty making ends meet to afford nutritional food. It is the largest food assistance program in the United States which saw participation soar by nearly 6 million during the covid-19 pandemic, now serving over 41 million people. Because it is run at the state level, the name of the program, the amount of benefits and the requirements can vary.
According to USDA Food and Nutrition Service, currently the average SNAP benefit per month is $239, but the allotment ranges from an average of $193 in New Hampshire to $271 in Utah and South Dakota. In Alaska recipents on average receive $387 and in Hawaii $463.
The official deadline for most taxpayers to file 2021 tax returns was 18 April 2022, but days prior to that date around 66 million filers had yet to send in their tax declaration. Not to fret though, the IRS is still accepting taxpayers’ annual income reports and the sooner you file the better.
The IRS urged all Americans, even those who are not required, to file this year, especially given the enhanced tax credits that were available for the 2021 fiscal year.
The agency advises those taxpayers who owe taxes to “file now to limit penalties and interest.” Taxpayers that don’t owe taxes will not be penalized for filing late and can still claim the Child Tax Credit for the 2021 tax year.
Don't miss out on 2021 Child Tax Credit
The 2022 tax filing deadline has passed, but the IRS is advising taxpayers that missed the deadline that they can still submit their tax declaration's for last year's income.
Taxpayers have until 17 October to use the agency's Free File to prepare and file 2021 tax returns electronically.
For the first time in history, many families with children in Puerto Rico will be eligible to claim the Child Tax Credit. It was made fully refundable for the 2021 fiscal year, so any portion of the credit that exceeded taxes owed would be added to your tax refund.
Taxpayers could claim up to $3,600 per child under six and $3,000 for each child six to seventeen at the end of the 2021 fiscal year.
Democratic lawmakers call on Biden to cancel student debt
Student loan payments and interest have been on hold since March 2020. Between the Trump and Biden administrations, they have renewed the moratorium seven times. The latest, which Biden has said will be the last, will continue until September 2022.
So far the Biden administration has canceled nearly $18 billion in student loan debt, but members of his party want him to go farther. They want him to use executive order to erase $50,000 in student debt for each borrower. Biden, however, has said that Congress must act and that he would sign off on up to $10,000 per borrower.
As Democrats, we fight for people in the checkout line trying to decide which groceries to send back when they can’t afford the whole cart. For people who can’t resume student loan payments. For people getting gouged at the pump. We must act to put government on their side.
I joined Senator Warren in urging the Biden Administration to help student loan borrowers currently in default. More than 7 million Americans are living with this hanging over their head—a fresh start would be good for both them and our economy.
One of the major promises made in President Joe Biden’s election campaign was the landmark decision to cancel student debt. Over a year into the presidency, and nothing has happened of the sort. It is proving to be a major stumbling block for the Democrats as they approach the midterm elections in November. After cancelling much of the pandemic-era social spending plans, voters are not inspired to vote for the Democrats and a large-scale defeat is extended.
Plans are afoot before the midterms to offer something for young voters but the president has been cautious to exercise his nuclear option: debt forgiveness.
The Department of Education announced that a review of how federal student loan programs have been administered found borrowers have been improperly steered into forbearance. Steps will be taken to correct those who have been affected in the past and ensure that future student loan borrowers aren’t sent down the same path.
Federal Student Aid (FSA) will conduct a one-time adjustment that it estimates will result in the immediate debt cancellation for tens of thousands of student loan borrowers. Additionally, millions more will be moved closer to debt forgiveness but borrowers who think they were affected will need to contact the FSA Ombudsman.
This deal is dangerous for our democracy. Billionaires like Elon Musk play by a different set of rules than everyone else, accumulating power for their own gain. We need a wealth tax and strong rules to hold Big Tech accountable.
Elon Musk, the billionaire who made his money from various outlets after being bankrolled by his family’s diamond mine in South Africa, has finally had his bid for Twitter accepted.
The huge takeover bid of social media site for an eye-watering sum is expected to herald big changes.
Price of oil steadies after sharp drop
Oil futures stabilized after falling more than four pecent on Monday in response to the Chinese central bank's pledge to support the economy bracing for a renewed surge of covid-19.
The Chinese government has begun mass testing most of Beijing's 22 million resident as part of its zero-covid policy. That sparked fears of an imminent shutdown of the capital city similar to the one imposed on Shanghi that has been going for two weeks.
The construction sector is "feeling the pinch" from inflation and increased interest rates
In an effort to combat inflation, the US Federal Reserve, plans to increase interest rates. One sector this change will impact rather quickly is the housing and construction. Already, homebuilders are “feeling the pinch” as they are now paying higher prices to construct new homes. If the builders are able to pass along the cost to the home buyer there is a clear problem. But why?
If inflation is temporary and over the coming year prices begin to fall, a contractor will be unable to pass the increased costs to the consumer. Because while costs may be higher, this does not have a direct impact on the value of the asset. The value of a home is based on a lot more than just the wood, plaster, paint and other materials used to build it. Even if wood, plaster, paint and other materials cost more in the short-run, it does not mean that those costs can be factored into the price of an asset. The same issue is happening in the car market. The price for chips has increased, but if car makers start increasing the price and overall prices start to decrease, a person will have paid more for a car than the actual value it holds.
To combat inflation, the Federal Reserve has begun to increase interest rates. Already, the average rate of a mortgage has nearly doubled since this time last year, pricing some would be home buyers out of the market.
Last year, the housing prices increased by more than eleven percent, representing the single largest one-year increase since the 2007 Financial Collapse. While, prices are still expected to increase this year, many are estimating that it will be by a smaller margin than what was seen in 2021.
Something truly rotten is going on with America's energy sector... There is something deeply wrong about seeing the largest oil and gas companies in the world drenched top executives and wealthy shareholders with cash while Americans are struggling at the pump.
Gas prices on the rise again
Consumers in the United States have been experiencing significant price rises in recent months as the economic recovery outpaces the rate of wage increase.
Inflationary pressures and supply chain issues have seen the cost of many essential products rise considerably in the past six months, but the recent ban on Russian oil and gas has seen the price of gasoline rise even higher.
High prices and US inflation down to Covid and Putin - Biden
President Joe Biden has said that the Covid-19 pandemic and Russia´s invasion of Ukraine are the prime reasons why prices have risen so sharply in the US and around the world.
"Let's be absolutely clear about why our prices are high now. Two reasons - first Covid. The way the global economy works, if a factory in Vietnam makes a computer chip and shits down due to Covid in Vietnam, the ripple effect can slow down automobile manufaturing in Detriot.
"So because of the pandemic, we've had disruptions in our supply of improtant materials. So prices went up. Just look at automobiles - last year, they accounted for one third of all the inflation in America. So I am calling on Congress to pass the Bipartisan Innovation Bill, so that we can make more computer chips here at home and speed up the supply chains," he said.
"The second big reason for inlfation is gas prices. And it's Vladimir Putin's gas price increase. Putin's invasion of Ukraine has driven up gas prices and food prices all around the world. I am doing everything I can to bring it down.
"That´s why I authorised the release of 1 million barrels per day for the next six months from our Strategic Petroleum Reserve - the largest reserve release in history".
Manchin set to shape Democrats clean energy initiative due to high energy costs
Democrats are set to sit down and continue negotiations on a $2 trillion spending package that includes proposals from President Biden on investing in families, education, health and combating climate change. The deal was scuppered by Senator Joe Manchin at the end of last year when he said he just couldn't vote for a raft of measures his fellow lawmakers had spent months hammering out.
Now with Americans upset about rising prices, especially at the pump, and Democrats needing to get something done before the midterm elections to improve what look like worsing chances at the polls, Manchin will be able to swing more weight in the negotiations on climate proposals according to Wall Street Journal sources.
He is likely to push for more leases on feredal lands to tap into fossil fuel resources. As well investments to help Western allies reduce their dependence on Russian oil and gas, making it easier to receive shipments from the US in the short term. While in the longer term transitioning to renewable energy sources.
AS USA's financial news live blog
Good morning and welcome!
Wall Street recovered some ground on Monday after major losses on Friday spooked by Federal Reserve chair voicing plans to raise rates by half a point in May to counter inflation. Congress has returned after a two-week break with long list of legislation to pass, including measures to tackle inflation. We'll bring you the latests on what is being done to combat rising prices.
The deadline to file a 2021 tax return and pay taxes was last week, but what can you do if you missed it? Looking for how to track your refund? Want to know what is being considered on Capitol Hill and in the states to support US households combat inflation? We have you covered.