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Tag: discretionary income

  • Cantor: Rising costs squeeze Long Island small businesses | Long Island Business News

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    In Brief:
    • Nearly 89% of Long Island businesses have five or fewer employees, making them vulnerable to and rising costs.
    • Restaurants face pressure from higher labor, food and energy costs, forcing many to cut staff, raise prices or close.
    • has fallen as rent, energy and insurance costs rise faster than wages.
    • Consumers are shifting spending toward discount retailers and essentials, leaving struggling to survive.

    Long Island small businesses are having a tough time, and with nearly 89% of Long Island businesses having five or fewer employees, that would portend difficult times ahead for the backbone of Long Island’s economy. The signs are everywhere. Neighborhood restaurants and shopping stores are closing, and vacant storefronts in community strip malls are growing. Even the haircutter I have been going to for over 30 years—after reducing her days of operation to three days—is wondering if she can hang on.

    The combination of rising labor and food costs fueled by minimum wage increases and inflation, restaurants are deciding to either raise prices, reduce menu options, operate with fewer employees, or just close for good. Other small businesses are finding it difficult competing with online sales, which have increased by 9.1%.  With consumers being 70% of the economy, Long Island consumers are not only having difficulty in supporting their local businesses, but also in meeting the needs of their household budgets. When household necessities of rent, energy and food claim most of what an employee earns, there is little discretionary income to spend in local stores.

    The U.S. Census and related housing market and consumer expenditure data indicate that 33% of earnings are spent for housing costs, 30% for federal and state withholding taxes, and 13% for food. The balance of 24% of earnings—or discretionary income—would be spent on property taxes, insurance and transportation, with what’s left spent in local businesses. However, this discretionary income is sure to decrease, considering the latest data indicating that rents have increased by 3.8%—the largest increase since 2011. This also includes electricity and natural gas increasing by 6.2% and 13.8%, respectively since last year. Additionally, for those who purchase insurance on the federal marketplace, premiums are estimated to increase by 75%.

    The U.S. Census is scheduled to release updated consumer expenditure data at the end of this month, and with inflation and costs outpacing wage increases, it can be expected that (at best) the 24% discretionary income will remain. However, more likely any discretionary income will decrease. Both options are not good news for struggling businesses, with any relief from consumers not appearing on the horizon.

    Consumers concerned about their financial future is not new. What is new is that consumer confidence is at the lowest level since June 2023, when the economy was struggling to rebound from the pandemic. This concern has impacted spending patterns, leaving businesses playing catch up with consumers as they become more selective in their purchase choices that include seeking better value for their dollar, and goods and services reflective of their lifestyle changes.

    Placer Research has found that consumers are choosing to shop at discount, dollar stores and off-priced apparel than conventional department stores. As for major, big ticket costly renovations to homes and wardrobe, consumers are favoring lower-cost wardrobe updating and refreshing home décor, while deferring larger electronics and home improvement spending. And as my haircutter is finding out: Shorter customer trips are giving way to longer visits.

    Discretionary income is crucial to Long Island’s small business base, and with economic headwinds and increased everyday costs, discretionary household budgets are being squeezed, leaving consumers with little choice but to be selective in how they spend their discretionary income.

    Not a welcome message to Long Island’s small business base.

     

    is director of the Long Island Center for Socio-Economic Policy and former Suffolk County economic development commissioner. He can be reached at [email protected].


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  • Rep. Burgess Owens hosts roundtable: How no tax on tips, overtime will benefit Utahns

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    Utah Rep. Burgess Owens and fellow Rep. Tim Walberg, R-Mich., joined with a number of local stakeholders Friday to discuss how Utahns will benefit from the Working Families Tax Cut Act.

    Part of the discussion, held at MACU offices in Sandy, focused on ways the legislation will benefit Utahns, including no tax on tips and no tax on overtime provisions, as well as a boost in support for school choice. Stakeholders involved in the roundtable included think tank members, members of business associations and leaders of private school systems.

    According to Owens, who is Higher Education and Workforce Development Subcommittee chairman, the legislation is the largest tax cut in the history of the U.S.

    “The real benefit of this bill is that it impacts everyone,” said Melva Sine, the CEO and president of the Utah Restaurant Association.

    “It gives us all more discretionary income so that we can enjoy the services, whether it’s a private school, whether it’s going out and enjoying your favorite restaurant more often, whatever that might be, this provides discretionary income for us all to enjoy using the services and the things that are available in our communities,” she added.

    Rep. Burgess Owens, R-Utah, visits the Utah State Correctional Facility in Salt Lake City on Monday, Aug. 4, 2025. | Kristin Murphy, Deseret News

    What Rep. Burgess Owens said about the Working Families Tax Cut Act

    “This act, which was passed recently, is a true miracle,” Owens said. “We’re recognizing the folks who made our country what it is. It’s our working class, middle class. It’s those who go out every single day, and they dream big, and all they want is just an opportunity to not only work hard, but hold on to what they have.”

    Pointing out that this is the largest tax cut in the country’s history, Owens said it will amount to $5 trillion over the next 10 years and is equal to an average of 15% tax cuts for Americans.

    The congressman also highlighted the new investment accounts for newborns included in the legislation, sharing how this will help contribute to fiscal responsibility education.

    Owens also said that this legislation is Congress recognizing that what they do is “truly at the front edge of our country’s freedom, our culture, our ability to educate our kids, ability to let them go out and have a good career, build their families, dream big, and a place of safety.”

    How no tax on tips will impact Utahns

    During the roundtable, Owens asked Sine to share how the no tax on tips provision will affect Utahns, specifically restaurant workers.

    Open Restaurants _sg_05.JPG

    Server Brennan Feller prepares curbside pickup orders at Market Street Grill in Cottonwood Heights on Tuesday, April 28, 2020. | Steve Griffin, Deseret News

    Sine shared that during the COVID-19 pandemic, the number of restaurant workers in Utah dropped from 111,000 to 63,000. There are now 123,000 restaurant employees in Utah, but they are still working on building that number.

    “Anything that can come along that can help incentivize these people to want to work, because our industry is an industry of work, you have to love work, you have to love hard work, you have to love people, and so this bill has helped us to entertain and create more job opportunities,” Sine said.

    She added that not only will this help incentivize people to join the industry, it will also help tipped employees to make more money.

    Walberg, who is Education and Workforce Committee chairman, said that when he goes to restaurants, he will write on the receipt, “I love no tax on tips,” which will lead to a discussion with the waiter or waitress about the provision.

    “It was more than just the money for them, it was the fact that they were appreciated to be tipped, but also they could make more. They could choose how to make more, and they wouldn’t be just the hourly employee in some of their minds. They were entrepreneurs. They were independent workers,” the congressman said.

    How no tax on overtime will impact Utahns

    Casey Hill, state director for the National Federation of Independent Businesses in Utah, was asked to share how the no tax on overtime provision of the bill will impact Utah’s businesses and employees.

    “If you think about the individuals who are typically earning or working overtime, those are typically some of your highest-producing, hardest-working individuals, and to further incentivize them to work and to engage more, take more of their hard-earned dollars home is significant for our employers,” Hill said.

    He said that 99% of the state’s employers have less than 500 employees, making Utah a “small business driven state,” meaning that “anything that impacts in a positive way small businesses will impact Utah in a significantly positive way.”

    This tax relief will go directly to individuals, allowing them to reinvest that into the economy in a number of ways.

    Hill also pointed out that many people talked about how giving tax dollars back to citizens is a loss of revenue for the state or federal government. He said that in most cases that revenue actually goes up because spending and investing increases.

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  • How Biden’s SAVE student loan repayment plan can lower your bill | CNN Politics

    How Biden’s SAVE student loan repayment plan can lower your bill | CNN Politics

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    Washington
    CNN
     — 

    While the Supreme Court struck down President Joe Biden’s student loan forgiveness program in late June, a separate and significant change to the federal student loan system is moving ahead.

    Eligible borrowers can now enroll in a new income-driven repayment plan that could lower their monthly bills and reduce the amount they pay back over the lifetime of their loans.

    If borrowers apply this summer, the changes to their bills would take effect before payments resume in October after the yearslong pandemic pause.

    Once the plan, which Biden is calling SAVE (Saving on a Valuable Education), is fully phased in next year, some people will see their monthly bills cut in half and remaining debt canceled after making at least 10 years of payments.

    Unlike Biden’s blocked one-time forgiveness program, the new repayment plan will provide benefits for both current and future borrowers who sign up for it.

    But the benefits will come at a cost to the government. Estimates vary, depending on how many borrowers end up enrolling in the plan, ranging from $138 billion to $475 billion over 10 years. As a comparison, Biden’s student loan forgiveness program was expected to cost about $400 billion.

    The SAVE repayment plan has gone through a formal rulemaking process at the Department of Education. The agency has previously created several other income-driven repayment plans in the same manner without facing a successful legal challenge.

    Some parts of the SAVE plan will be implemented this summer and others will take effect in July 2024. Here’s what borrowers need to know.

    Currently, there are several different kinds of income-driven repayment plans for borrowers with federal student loans. The new SAVE plan will essentially replace one of those, known as REPAYE (Revised Pay As You Earn), while the others are phased out for new borrowers.

    Under these plans, payments are based on a borrower’s income and family size, regardless of how much outstanding student debt is owed.

    There is also a forgiveness component. After making at least 10 years of payments, a borrower’s remaining balance is wiped away.

    Borrowers must have federally held student loans to qualify for the SAVE repayment plan. These include Direct subsidized, unsubsidized and consolidated loans, as well as PLUS loans made to graduate students.

    Parents who took out a federal PLUS loan to help their child pay for college are not eligible for the new repayment plan.

    Borrowers with Federal Family Education Loans, known as FFEL, or Perkins Loans that are held by a commercial lender rather than the government will need to consolidate into a Direct loan in order to qualify.

    Private student loans do not qualify for the new SAVE repayment plan or any other federal repayment plan.

    Borrowers can apply for the SAVE plan by submitting a recently updated application for income-driven repayment plans found here.

    The application may be available intermittently during an initial beta testing period, according to the Department of Education. If the application is not available, try again later.

    Applications submitted during the beta period will not need to be resubmitted once a full website launches later this summer.

    Borrowers can expect to receive an email confirmation after applying.

    People who are already enrolled in the REPAYE repayment plan will be automatically switched to the SAVE plan.

    Borrowers can log in to StudentAid.gov and go to their My Aid page to see what repayment plan they are enrolled in.

    The Department of Education says that it will process applications submitted this summer before payments resume in October.

    “It may take your servicer a few weeks to process your request, because they will need to obtain documentation of your income and family size,” according to the department’s website.

    Under the SAVE plan, monthly payments can be as small as $0.

    Other income-driven repayment plans already offer a $0 monthly payment for some borrowers. But the new SAVE plan lowers the qualifying threshold.

    A single borrower earning $32,800 or less or a borrower with a family of four earning $67,500 or less will see their payments set at $0 if enrolled in SAVE.

    Increase in protected income threshold: Like in existing income-driven repayment plans, a borrower’s discretionary income, generally what’s left after paying for necessities like housing, food and clothing, will be shielded from student loan payments.

    The new SAVE plan recalculates discretionary income so that it’s equal to the difference between a borrower’s adjusted gross income and 225% of the poverty level. Existing income-driven plans calculate discretionary income as the difference between income and 150% of the poverty level.

    This change will result in lower payments for borrowers.

    Interest limit: Under the new payment plan, unpaid interest will not accrue if a borrower makes a full monthly payment.

    That means that a borrower’s balance won’t increase even if the monthly payment doesn’t cover the monthly interest. For example: If $50 in interest accumulates each month and a borrower has a $30 payment, the remaining $20 would not be charged.

    Lower payments for married borrowers: Married borrowers who file their taxes separately will no longer be required to include their spouse’s income in their payment calculation for SAVE. This could lower monthly payments for two-income households.

    Automatic recertification: Borrowers will now be able to allow the Department of Education to access their latest tax return. This will make the application process easier because borrowers won’t have to manually provide income or family size information. It will also allow the department to automatically recertify borrowers for the payment plan on an annual basis.

    Cut payments in half: Payments on loans borrowed for undergraduate school will be reduced from 10% to 5% of discretionary income.

    Borrowers who have loans from both undergraduate and graduate school will pay a weighted average of between 5% and 10% of their income based upon the original principal balances of their loans.

    For example, a borrower with $20,000 from their undergraduate education and $60,000 from graduate school will pay 8.75% of their income, according to a fact sheet provided by the Biden administration.

    Shorter time to forgiveness: Currently, borrowers who pay for 20 or 25 years under an income-driven repayment plan will see their remaining balance wiped away.

    Under the new SAVE plan, those who borrowed $12,000 or less will see their debt forgiven after paying for just 10 years. Every additional $1,000 borrowed above that amount would add one year of monthly payments to the required time a borrower must pay.

    Borrowers who consolidate their loans will receive partial credit for their previous payments toward forgiveness.

    Borrowers will also automatically receive credit toward forgiveness for certain periods of deferment and forbearance, as well be given the option to make additional “catch-up” payments to get credit for all other periods of deferment or forbearance.

    Automatically enroll struggling borrowers: Borrowers who are 75 days late on their payments will be automatically enrolled in the best income-driven plan for them, as long as they have agreed to allow the Department of Education to securely access their tax information.

    This story has been updated with additional information.

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