Tag: Consumer affairs

IRS releases new federal tax brackets and standard deductions. Here’s how they affect your family’s tax bill.

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America’s high inflation rate will produce a 7% increase in the size of the standard deduction when workers file their taxes on their 2023 income, according to new inflation adjustments from the Internal Revenue Service.

It’s also going to pump up tax brackets by 7% as well, according to the annual inflation adjustments the IRS announced this week.

Many tax code provisions — but not all — are indexed for inflation, so the announcements are a recurring event. But when inflation is persistently clinging to four-decade highs, these annual adjustments carry extra significance.

“When inflation is persistently clinging to four-decade highs, these annual adjustments of approximately 7% for the standard deduction carry extra significance.”

Start with the standard deduction, which is what most people use instead of itemizing deductions.

The standard deduction for individuals and married people filing separately will be $13,850 for the 2023 tax year. That’s a $900 increase from the $12,950 standard deduction for the upcoming tax season.

For married couples filing jointly, the payout climbs to $27,700 for the 2023 tax year. That’s a $1,800 increase from the $25,900 standard deduction set for the upcoming tax year.

The increases in the marginal tax rates reflect the same 7% rise. For example, the 22% tax bracket for this year is over $41,775 for single filers and over $83,550 for married couples filing jointly. Next year, the same 22% bracket applies to incomes over $44,725 and over $89,450 for married couples filing jointly.

MarketWatch/IRS

“The changes seem to be much larger than previous years because inflation is running much higher than it has in previous decades,” said Alex Durante, economist at the Tax Foundation, a right-leaning tax think tank.

The IRS arrives at its inflation adjustments by averaging a slightly different inflation gauge, the so-called “chained Consumer Price Index” instead of the widely-watched Consumer Price Index, Durante noted. That’s an outcome of the Trump-era Tax Cuts and Jobs Act of 2017, he added.

“The reason they do this is because the regular CPI is thought to overstate inflation because it doesn’t take into account the substitution that shoppers can make as cost rise,” Durante said. Shoppers substitute when they swap a more expensive item for cheaper one, and research shows many Americans are using the tactic.

The IRS inflation adjustments come after September CPI data last week showed inflation of 8.2% year-over-year, slightly off from 8.3% in August. Also last week, the Social Security Administration said next year’s payments would include an 8.7% cost of living adjustment.

“The payout on the earned income tax credit — geared at low- and moderate-income working families who have been hit hard by red-hot inflation — is also increasing. ”

The payout on the earned income tax credit is also increasing. The maximum payout for a qualifying taxpayer with at least three qualifying children climbs to $7,430, up from $6,935 for this tax year. The longstanding credit is geared at low- and moderate-income working families who have been hit hard by red-hot inflation.

More than 60 provisions are slated for an increase inline with inflation, but many portions of the tax code are not indexed for inflation. Depending on the circumstances, the taxes or the tax breaks kick in sooner.

Capital gains tax rules one example. The IRS lets a taxpayer use capital losses to offset capital gains taxes. If losses exceed gains, the IRS allows a taxpayer to deduct up to $3,000 in excess loses. They can then carry the remainder of the capital loses to future tax years. It’s been more than four decades since lawmakers last set the limit, according to Durante.

“While more than 60 provisions are slated for an increase inline with inflation, many portions of the tax code are not indexed for inflation. They include capital gains tax. ”

Given the stock market’s rocky downward slide this year, many investors might welcome a fast-approaching tax break — even if it only enables a $3,000 deduction.

At the same time, a married couple selling their home can exclude the first $500,000 of the sale from capital gains taxation, and it’s $250,000 for a single filer. It’s been that way since the exclusion’s 1997 establishment.

The once white-hot housing market may be cooling, but many sellers may still be facing the point when taxes kick in. The median home listing was over $367,000 as of early October, according to Redfin
RDFN,
+2.29%.

The child tax credit is another example. After the payout to parents last year jumped to $3,600 for children under age 6 and $3,000 per child age 6 to 17, it’s back to a maximum $2,000. The credit’s refundable portion climbs from $1,500 to $1,600 during tax year 2023, the IRS notes.

Proponents of the boosted payouts and some Congressional Democrats want to revive the larger payments in negotiations tied to corporate taxes. The high costs of living are a strong reason to bring back the boosted credit, they say.

Related:

What smart strategies can lower your tax bill as year-end approaches? Read this before making any tax moves.

Three things the best 401(k)s offer that can help you save a lot more

Enhanced child tax credit helped reduce poverty for families before it ended last year. But there’s one way Republicans and Democrats could agree on reinstating it.

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October 22, 2022
Australia flags new corporate penalties for privacy breaches

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CANBERRA, Australia — Australia on Saturday proposed tougher penalties for companies that fail to protect customers’ personal data after two major cybersecurity breaches left millions vulnerable to criminals.

The penalties for serious breaches of the Privacy Act would increase from 2.2 million Australian dollars ($1.4 million) now to AU$50 million ($32 million) under amendments to be introduced to Parliament next week, Attorney-General Mark Dreyfus said.

A company could also be fined the value of 30% of its revenues over a defined period if that amount exceeded AU$50 million ($32 million).

Dreyfus said “big companies could face penalties up to hundreds of millions of dollars” under the new law.

“It is a very, very substantial increase in the penalties,” Dreyfus told reporters.

“It’s designed to make companies think. It’s designed to be a deterrent so that companies will protect the data of Australians,” he added.

Parliament resumes on Tuesday for the first time since mid-September.

Since Parliament last sat, unknown hackers stole personal data from 9.8 million customers of Optus, Australia’s second-largest wireless telecommunications carrier. The theft has left more than one-third of Australia’s population at heightened risk of identity theft and fraud.

Unknown cybercriminals this week demanded ransom from Australia’s largest health insurer, Medibank, after claiming to have stolen 200 gigabytes of customers’ data including medical diagnoses and treatments. Medibank has 3.7 million customers. The company said the hackers had proved they hold the personal records of at least 100.

The thieves have reportedly threatened to make public medical conditions of high-profile Medibank customers.

Dreyfus said both breaches had shown “existing safeguards are inadequate.”

As well as failing to protect personal information, the government is concerned that companies are unnecessarily holding too much customer data for too long in the hope of monetizing that information.

“We need to make sure that when a data breach occurs the penalty is large enough, that it’s a really serious penalty on the company and can’t just be disregarded or ignored or just paid as a part of a cost of doing business,” Dreyfus said.

Dreyfus hopes the proposed amendments will become law in the final four weeks that Parliament will sit this year.

Any new penalties will not be retroactive and will not effect Optus or Medibank.

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October 21, 2022
Thai regulator approves $7.3 billion telecoms carrier merger

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BANGKOK — Thailand’s telecoms regulator has agreed to allow a merger between the country’s two main phone carriers in a decision that raises worries over whether reduced competition will harm consumer interests.

The $7.3 billion deal will merge True Corp. and smaller DTAC, a subsidiary of Norway’s Telenor Group. The new entity, to be called NewCo, will have about 51 million subscribers. The next largest telecoms carrier, AIS, or Advanced Info Service, has 44 million subscribers.

True is owned by Charoen Pokphand (CP) Holding, one of the country’s biggest family-controlled conglomerates. It has 32 million subscribers to DTAC’s 19 million.

Shareholders of True and DTAC, or Total Access Communication Plc., approved the merger plan in April.

The regulatory go-ahead by the National Broadcasting and Telecommunications Commission came late Thursday in a 3-2 vote in favor, with the chair casting a deciding vote after more than 10 hours of discussions.

The commission imposed conditions that included price controls, keeping current service agreements in place and requiring the expansion of 5G coverage to at least 90% of the population within five years. It said it could cancel or add further conditions if it observes monopolistic behavior due to the merger.

“The merger will create a long and lasting impact and make it impossible to turn back the clock,” Pirongrong Ramasoota, one of the two commissioners who voted against letting the merger go ahead, said in a Facebook post. She said the deal could result in unfair competition and prevent other companies from trying to enter the market.

“The development of our country depends on the competitiveness of the mobile service industry, which also is a key to boosting the economy,” she said.

The approval reflects the sway of the huge family-run conglomerates that own big chunks of Thailand’s economy, critics said.

“Despite massive protest, comments, reports, analysis and plain common sense, it is no surprise that the NBTC ended up allowing the merger,” Yozzo, a telecoms, media and technology consulting firm, said in a report.

“Big conglomerates in Thailand have long enjoyed market power in a regime that many perceive to be friendly towards the big family companies,” it said, adding that consumers and businesses will pay the price of having two companies be the virtual gatekeepers of going digital.

True and DTAC have said they are merging to better invest in next-generation telecommunications to advance Thailand’s adoption of digital technology.

The companies have said they plan to list the newly merged company on Thailand’s stock exchange as soon as November.

———

Associated Press journalist Tassanee Vejpongsa contributed.

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October 21, 2022
Consumers pay 14.1% more on average for pumpkin-spice products

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We may be paying a price for our pumpkin-spice cravings.

A new study from the MagnifyMoney.com website has found that retailers routinely charge more for pumpkin-spice items than for the standard versions of those same products — in fact, a lot more. On average, the pumpkin-spice “tax,” as MagnifyMoney.com dubs it, is 14.1%.

That’s a significant increase from 2020, which was the last time MagnifyMoney looked at the pumpkin-spice pricing differential. At that time, the “tax” was 8.8%.

“I think companies are finding it’s a great way to capitalize on a seasonal trend,” said Ismat Mangla, executive editor of MagnifyMoney.com. “As long as consumers are willing to pay for it, they can take advantage of it.” MagnifyMoney.com, which is owned by LendingTree, offers information on how to manage and grow your money.

Craig Agranoff, a Florida-based marketing expert, put it this way: “It’s Retailing 101.”

Some retailers really push the pumpkin-spice upcharge to the upper limits, the 2022 study noted. A case in point: Trader Joe’s, the supermarket chain beloved for its low prices, charges 161.1% more for its Pumpkin Spiced Teeny Tiny Pretzels than for its Honey Wheat Pretzel Sticks. The retailer also charges 49.9% more for its Pumpkin Spice Hummus than for its Mediterranean Style Hummus.

And what about Starbucks
SBUX,
-1.60%,
the coffee chain that made pumpkin spice a household favorite? The study found that it levies an 18.3% “tax” on its ever-popular Pumpkin Spice Latte (or PSL), with a standard 16-ounce latte running $5.45 and the PSL costing $6.45.

Trader Joe’s and Starbucks didn’t respond to a MarketWatch request for comment.

Agranoff said consumers are probably willing to pay more for pumpkin-spice products without complaining because the products are not considered essentials. By contrast, consumers tend to be very sensitive when it comes to price increases on items they need to buy on a regular basis, such as milk or gasoline.

Still, not every retailer is asking consumers to shell out more for pumpkin-spice products. Target
TGT,
-1.28%
charged less for several items versus the standard ones, the MagnifyMoney.com study found. One example: A bag of Pepperidge Farm Milano pumpkin-spice cookies was 14.3% cheaper than the traditional Milano cookies at Target.

Regardless of whether the price is higher or lower, Mangla of MagnifyMoney.com isn’t one to buy these products. “Personally, I’m over pumpkin spice,” she said.

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October 19, 2022
Home builders sentiment index falls for record tenth month in a row in October. Home builders say the ‘situation is unhealthy and unsustainable.’
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The numbers: The National Association of Home Builders’ (NAHB) monthly confidence fell 8 points to 38 in October, the trade group said on Tuesday.

It’s the tenth month in a row that the index has fallen.

Outside of the pandemic, the October reading of 38 is the lowest level since August 2012.
A year ago, the index stood at 80.

The index’s ten-month drop is a new record. The index last fell for 8 months straight in 2006 and 2007.

Key details: All three gauges that underpin the overall builder-confidence index fell.

The gauge that marks current sales conditions fell by 9 points.

The component that assesses sales expectations for the next six months fell by 11 points.

And the gauge that measures traffic of prospective buyers fell by 6 points.

All four NAHB regions posted a drop in builder confidence, led by the south and the west.

It’s also likely that this year will be the first time since 2011 that single-family starts see a decline, the NAHB added.

Big picture: Builders continue to struggle to find buyers with the current rate environment.

Now they’re saying they’re worried about that depressed demand impacting supply moving forward.

Specifically, they’re concerned about housing affordability worsening, with potentially fewer new homes being built in the future.

Mortgage rates have doubled from last year, now exceeding 7%, which has considerably cooled buyer demand.

Home price growth is moderating, but prices have not come down substantially — yet.

The median sales price for a new home was $436,800 in August, according to the U.S. Census Bureau.

What the NAHB said: Builders are expecting single-family starts to fall for the first time in 11 years — and expect additional declines through 2023, said NAHB Chief Economist Robert Dietz, due to the Federal Reserve’s projected rate hikes to control inflation.

“While some analysts have suggested that the housing market is now more ‘balanced,’ the truth is that the homeownership rate will decline in the quarters ahead as higher interest rates, and ongoing elevated construction costs continue to price out a large number of prospective buyers,” he added.

“This situation is unhealthy and unsustainable,” Jerry Konter, a home builder and developer from Savannah, Ga. and the NAHB’s chairman, said in a statement.
“Policymakers must address this worsening housing affordability crisis,” he added.

What are they saying? “The housing sector – sentiment, building activity and sales – is collapsing under the weight of a rapid increase in interest rates and elevated prices, which are crimping affordability and demand,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note.

So expect building activity to be depressed, she added.

Market reaction: The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.989%
fell to 3.98% on Tuesday morning.

While the SPDR S&P Homebuilders ETF
XHB,
+2.15%
traded slightly higher during the morning session, and the big home-builder stocks, from D.R. Horton Inc.
DHI,
+2.90%
to Toll Brothers
TOL,
+1.87%
to Lennar
LEN,
+2.97%,
edged higher.
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October 18, 2022
Halloween spending expected to increase by $500 million — as candy prices soar at the highest rate on record

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It’s going to be a big year for Halloween, despite millions of Americans feeling under financial pressure due to inflation.

Total spending is expected to hit $10.6 billion, an increase of 5% or $500 million on last year, the National Retail Federation estimates. That’s up $2 billion or 20% on the $8.8 billion Halloween expenditure in 2019 before the COVID-19 pandemic.

Spending on costumes expect to reach $3.6 billion this year, the NRF survey finds, the highest since 2017. Adult costume spending could reach $1.7 billion this year, $200 million more than last year.

More than half (57%) of Americans said that inflation did impact their Halloween spending, according to a separate LendingTree Halloween spending survey. In fact, nearly a quarter of this group said they were buying less candy.

Inflation was 8.2% in September compared to last year, according to Bureau of Labor Statistics data. It was among the highest level in the past four decades.

Candy and chewing gum rose 13.1% year-on-year in September, the highest increase on record, the BLS said. To put that in context: Candy and chewing gum increased 13% from December 1997 to December 2006.

“Candy and chewing gum rose 13.1% year-on-year in September, the highest increase on record.”

For those who haven’t started, the competition was already on. In July, Home Depot
HD,
+2.13%
announced that its popular 12-foot skeleton was sold out, three months before the celebration.

A Home Depot spokesperson confirmed the initial sellout of the skeleton in summer, and said the company has been releasing more of these items periodically since then.

Supply-chain disruptions could also complicate the competition. During Hershey’s
HSY,
+0.57%
second-quarter earnings call in July, Chief Executive Officer Michele Buck said the candy manufacturer had to prioritize the everyday candy packaging over the Halloween ones. She said that decision was “critical to enable us to increase advertising and merchandising levels.”

In an email to MarketWatch, however, a Hershey’s spokesperson said this decision was not a sign of shortage, adding that the brand had produced more candies for the season than they had in previous years, as Halloween demand remains high.

“Like every season over the past few years, sell-through at retail remains high with people purchasing candy, décor and other seasonal items earlier and more often. As a result, seasonally packaged candy may be more limited on the shelf as we get to the final week of the season. Fortunately, the same great brands in snack sizes are available to help fill trick-or-treat bags and buckets,” she said.

“On average, Americans plan to spend between $100 and $169 on Halloween candy, décor, cards and costumes.”

On average, Americans plan to spend $100 on average for Halloween candy, décor, cards and costumes, the National Retail Federation said. LendingTree estimates that households will spend $169 this year, with six-figure salary earners and parents with young children planning to spend the most — $340 and $309 respectively.

More than a third of the consumers surveyed admit they plan to spend more than they can afford this year. Generation Z — those aged 18 to 24 — and parents with younger children are the most likely to admit to overspending.

“With the worst of the pandemic further in the rearview mirror, people are excited to get back to spending on the things they love most —, particularly the things they maybe couldn’t fully enjoy over the last few years,” LendingTree chief credit analyst Matt Schulz said.

The most common reason for overspending: 44% of respondents said they spent more than they had expected, while 34% said they were making their children happy.

The NRF concluded that 40% of people are shopping at discount stores this Halloween, 36% at specialty Halloween costume stores, and 31% online. Another 11% said they will shop at thrift stores and resale shops.

“Social media is playing an increasingly important role in consumer behavior, and Halloween is no different,” Phil Rist, executive vice-president of strategy at Prosper Insights & Analytics, said. “Younger consumers, particularly those under the age of 25, will look to platforms like Instagram and TikTok for costume inspiration this year.”

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October 17, 2022
Rivian stock sinks toward 3-month low in wake of vehicle recall for safety issue

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Shares of Rivian Automotive Inc.
RIVN,
-7.64%
sank 8.8% toward a three-month low in premarket trading, in the wake of the electric vehicle maker’s large vehicle recall due to steering problems. The company said late Friday that it intends to recall about 13,000 vehicles, which The Wall Street Journal reported was to repair improperly installed fasteners that could cause drivers to lose steering control. The company said it was “committed to fixing this issue” as quickly as possible. The stock, which sank 7.6% on Friday prior to the report of the recall, has plunged 67.3% year to date while the S&P 500
SPX,
-2.80%
has shed 23.6%.

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October 10, 2022
Australian police make first arrest in Optus hack probe

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CANBERRA, Australia — A police investigation of a cyberattack on an Australian telecommunications company in which the personal data of more than one third of Australia’s population was stolen has resulted in its first arrest, investigators said Thursday.

Police launched Operation Hurricane in cooperation with the U.S. Federal Bureau Investigation after Optus, Australia’s second-largest wireless carrier, lost the personal records of 9.8 million current and former customers on Sept. 21.

The hacker dumped the records of 10,000 of those customers on the dark web last week as part of an attempt to extort $1 million from Optus, a subsidiary of Singapore Telecommunications Ltd., also known as Singtel.

A 19-year-old Sydney man was arrested on Thursday and charged with using the dumped data in a text message blackmail scam, police said in a statement.

The man, who has not been identified publicly, has yet to appear in court on two charges that carry prison sentences of up to 10 and seven years.

Police allege he sent text messages to 93 Optus customers demanding 2,000 Australian dollars ($1,300) be deposed in a bank account or the data would be used in a financial crime. None of the targets paid.

One of the extortion targets, identified only as Belinda and described as a mother of a 5-year-old child with cancer, told Nine Network News last week, “To be honest, it’s just not what we need.”

“I guess they’re just trying to hopefully pressure people into paying,” she told Nine.

Australian Federal Police Assistant Commissioner Justine Gough said the investigation is continuing.

“The Hurricane investigation is a high priority for the AFP and we are aggressively pursuing all lines of inquiry to identify those behind the attack,” Gough said.

“Just because there has been one arrest does not mean there won’t be any more arrests,” she added.

The Australian government announced changes to its telecommunications law to protect vulnerable Optus customers.

The changes to the Telecommunications Regulations allow Optus and other providers to better coordinate with financial institutions and governments to detect and mitigate the risk of cybersecurity incidents, fraud, scams and other malicious cyber activities, a government statement said.

Optus ran full-page ads in Australian newspapers on Saturday under the headline, “We’re deeply sorry.”

The ad included a link to an Optus website that details actions that customers can take to avoid identity theft and fraud.

The government can change regulations without legislative approval. But the government hopes to pass changes to the Privacy Act in Parliament during the final four weeks of its 2022 session in response to the Optus breach.

The changes would include increased penalties for companies with lax cybersecurity protections and curbs on the quantities and types of customer data that businesses can amass, as well as the duration for which personal information can be kept.

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October 6, 2022
Australia updates law to protect data after Optus hack

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CANBERRA, Australia — The Australian government announced changes Thursday to its telecommunications law to protect vulnerable customers after personal details were stolen in a major cyberattack on the nation’s second-largest wireless carrier.

The changes to Telecommunications Regulations allow Optus and other providers to better coordinate with financial institutions and governments to detect and mitigate the risk of cybersecurity incidents, fraud, scams and other malicious cyber activities, Treasurer Jim Chalmers and Communications Minister Michelle Rowland said in a joint statement.

“What this is all about is to try and reduce the impact of this data breach on Optus customers and to enable financial institutions to implement enhanced safeguards and monitoring,” Rowland told reporters.

More than one in three Australians had personal data stolen when Optus lost the records of 9.8 million current and former customers including passport, driver’s license and national health care identification numbers in a hack discovered on Sept. 21.

The hacker dumped the records of 10,000 of those customers on the dark web last week as part of an attempt to extort $1 million from Optus, a subsidiary of Singapore Telecommunications Ltd., also known as Singtel.

Optus ran full-page ads in Australian newspapers on Saturday under the headline: “We’re deeply sorry.”

The ad included a link to an Optus website that details actions customers can take to avoid identity theft and fraud.

The government can change regulations without reference to the Parliament. But the government hopes to pass changes to the Privacy Act through the Parliament during its final four sitting weeks of 2022 in response to the Optus breach.

The changes would include increased penalties for companies with lax cybersecurity protections and curbs on the quantities and types of customer data that businesses can amass, as well as the duration for which personal information can be kept.

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October 5, 2022