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From Minimum Wage Hikes to Taxes: How the Midterm Elections Impact Your Wallet

Impact of Midterm Elections on Consumers Wallets

The midterm elections have brought about several changes that will impact consumers’ wallets in various ways. From minimum wage hikes to taxes, these changes will affect not only individual consumers but also businesses and the economy as a whole.

In this article, we will explore how the midterm elections’ outcomes will impact consumers’ wallets.

Minimum Wage Hikes

One of the most significant changes that consumers will face is the minimum wage hike. Several states have approved minimum wage hikes that will increase the minimum wage for workers.

In Nebraska, voters approved a measure to raise the minimum wage to $9 an hour by 2020. In Nevada, the minimum wage will increase to $12 an hour by 2024.

In Washington D.C., voters approved a measure to raise the minimum wage to $15 an hour by 2020. The minimum wage hike will affect approximately 5 million workers in the United States.

Another essential factor to note is that the tipped minimum wage will also increase. This measure means that businesses will be required to pay tipped workers at least the full minimum wage.

The minimum required wage for tipped workers is $2.13 an hour in 43 states, but this is expected to increase in the coming years. Social Security & Medicare

Another aspect of the midterm elections is how it will impact Social Security and Medicare.

Republicans have been proposing cuts to these vital programs, but the election results may hinder their ability to do so. Democrats have won control of the House of Representatives, making it more difficult for Republicans to pass legislation to cut Social Security and Medicare.

However, there is still a possibility that Republicans will attempt to make changes to these programs. One proposal is the

Inflation Reduction Act, which would reduce Social Security and Medicare benefits by adjusting for inflation. Another proposal is to allow Medicare to negotiate prescription drug costs, which would lower drug prices.

It is essential for consumers to stay up-to-date on these proposals to ensure that they are informed about any potential changes.

Taxes

Taxes are always a significant concern for consumers, and the recent changes to taxes have only added to the confusion. With the Republicans retaining control of the Senate, it is likely that they will continue to push for tax cuts.

The Tax Cuts and Jobs Act, which was passed in 2017, significantly lowered the top individual rate, reduced tax rates for pass-through businesses, and eliminated the SALT deduction. With the Democrats taking control of the House of Representatives, it is unclear how successful Republicans will be in pushing through additional tax cuts.

However, it is essential to note that any tax changes could significantly impact consumers’ wallets.

Federal Reserve Interest Rate Hike

Apart from changes due to the midterm elections, consumers also need to be aware of the Federal Reserve’s actions. The Federal Reserve has recently raised interest rates and is expected to continue doing so in the coming months.

The interest rate increases could potentially make credit cards and mortgages more expensive for consumers, which would impact their wallets. The Federal Reserve has announced that they will be increasing the interest rate by a quarter of a percentage point.

This rate hike will affect variable rate loans, such as credit cards and adjustable-rate mortgages, increasing the interest paid on them. Fixed-rate mortgages will not be affected, but the rate of interest on new loans may increase.

Consumers need to be aware of how these interest rate hikes will impact their finances. In conclusion, there are several ways that the midterm elections and changes in policies may affect consumers’ wallets.

From minimum wage hikes to taxes and interest rate increases, it is essential for consumers to stay informed about the changes and how they will impact them. Understanding these changes is vital in making informed financial decisions, safeguarding their wallets, and maximizing their financial well-being.

3) Concerns About a Recession on Daily Finances

As the US economy experiences the longest stretch of economic growth since World War II, concerns regarding a potential recession and its effect on daily finances have surfaced. A recent MassMutual survey found that 84% of Americans are concerned about how a recession would impact their financial well-being.

Here, we will explore the possible ways a recession can impact daily finances, and how to prepare for them.

Inflation

One way a recession can impact daily finances is through inflation. A recession can lead to price increases due to a decrease in supply and demand.

Inflation reduces the purchasing power of money, and as prices go up, consumers may struggle to keep up with the cost of living. Therefore, consumers should invest in assets such as gold, silver, and other commodities that hold their value against inflation.

Debt

Another impact of a recession on daily finances is increasing debt. During a recession, job losses can be significant, resulting in a shortfall of income that makes it challenging to pay off credit card and mortgage debts.

Notably, the job market becomes incredibly competitive, and it may take some time to find another job. Consumers should focus on paying off debts before the recession hits, reducing the amount of interest accumulated and the risk of missed payments that can lower their credit score.

Other tactics include creating an emergency fund and looking for alternative sources of income, such as freelancing and side hustles. Prioritizing debt payment helps to ensure that emergency funds last longer and deal holistically with the debt burden.

4) Prescription Drug Costs and Repealing the

Inflation Reduction Act

Prescription drug costs continue to be a significant burden on many Americans’ daily finances. Last year, the Trump administration proposed repealing the

Inflation Reduction Act, which would have increased the cost of prescription medicines for Medicare beneficiaries. Here we will explore how the proposed repeal would impact prescription drug costs and the potential solutions that can help reduce costs.

Inflation Reduction Act

The

Inflation Reduction Act requires drug companies to pay a rebate on medication to the Medicare system if the price increases faster than inflation. This act has saved Medicare billions in the past, and its repeal would cost the program around $350 billion over the next decade.

This proposed repeal could increase the burden of prescription drug costs on millions of Americans, leading to chronic medication non-adherence.

Drug Companies and Beneficiaries

The repeal of the

Inflation Reduction Act could benefit drug companies as there will be no incentive for reduced prices, leading to a significant increase in revenue. In contrast, beneficiaries will incur higher costs, increasing the out-of-pocket payments and creating an untenable pathology of increasing financial burden of prescription medications.

Insulin

Patients suffering from diabetes are among those that will be hit worst by the proposed repeal of the

Inflation Reduction Act since insulin prices have witnessed significant hikes. According to data, insulin prices have increased by over 52% from 2014 to 2020, a rate that has outpaced inflation and Medicare’s medical care components.

Potential Solutions

There are various solutions to reducing prescription drug costs, one of which is transparency. Encouraging transparency can push manufacturers to publicly reveal how prices are set and reduce non-transparent tactics like copay coupons that drive up costs for some people.

The second solution is to promote generic drugs that are cheaper alternatives to brand name equivalents. Increased awareness and support from government at federal and state levels can encourage manufacturers to increase competition in the drug market and increase access to affordable drugs.

In conclusion, a recession and the repeal of the

Inflation Reduction Act can significantly impact daily finances for Americans. However, by investing in assets that can survive inflation, focusing on paying off debts, and exploring alternative sources of income, consumers can prepare themselves.

In addition, policymakers need to promote transparency, increase competition, and increase awareness of generic drugs to control prescription drug costs.

5) Proposal to Make Tax Cuts from the Tax Cuts and Jobs Act Permanent

The Tax Cuts and Jobs Act, signed into law in 2017, significantly reduced taxes for businesses and individuals. The law has been controversial, with critics arguing that it has primarily benefited the wealthy and increased the national deficit.

Republicans have proposed making the tax cuts permanent, which would make the tax cuts permanent instead of expiring in 2025. Here, we will explore the potential effects of making the tax cuts permanent and the arguments for and against it.

The Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act has three primary components: lowering the top individual rate, reducing tax rates for pass-through businesses, and eliminating the State and Local Tax (SALT) deduction. The law also cut corporate tax rates and doubled the estate tax threshold, benefiting mostly the wealthy.

The Tax Cuts and Jobs Act is set to expire in 2025. Republicans argue for making the tax cuts permanent for various reasons, including promoting economic growth, creating jobs, and keeping money in people’s pockets.

However, Democrats and some economists argue that the benefits are primarily for the rich and that it increases the national debt.

Permanent Tax Cuts

Making the tax cuts permanent would provide certainty and stability for businesses and individuals. It would create long-term plans and encourage businesses to invest in the economy, which would result in increased job creation.

By keeping more money in the hands of individuals, the tax cuts could have a potential positive effect on consumer spending, further boosting the economy.

The Tax Cuts and Jobs Act required a significant amount of paperwork and time to understand how it affected businesses and individuals. Permanent tax cuts would reduce the bureaucracy and eliminate the need for constant updates about changes to taxes every year, providing a stable tax environment for businesses.

Additionally, permanent tax cuts would provide certainty and predictability, making it easier for companies to invest in the economy. The Tax Foundation has argued that making the tax cuts permanent would lead to an estimated 1.5% increase in gross domestic product and create approximately 1.8 million jobs.

Against

Permanent Tax Cuts

Critics argue that making the tax cuts permanent will worsen income inequality and increase the national debt, exacerbating issues that already exist under the current system. Favoring the wealthy at the expense of the broader population can create deep rifts in society, as seen in countries like Brazil and the United Kingdom.

Most of the benefits of the Tax Cuts and Jobs Act went to the wealthy, who received 80% of the benefits, according to the Tax Policy Center. Critics suggest that a fairer tax policy is needed to address the vast wealth inequality in the US.

Another argument against the permanent tax cuts is a lack of evidence that the tax cuts have led to economic growth. While the tax cuts have decreased some taxes, it has also increased the deficit.

The national deficit has increased over the years, and many worry about how the federal government will pay down the debt.

Another issue lies in the SALT deduction elimination, which impacts residents of states with higher income and property taxes.

Critics have moved to reinstate the SALT deduction so that residents will be able to gain back the benefit that they used to enjoy.

Conclusion

The debate surrounding the proposal to make the tax cuts from the Tax Cuts and Jobs Act permanent is complex and divisive. Republicans argue that it will create long-term stability and encourage businesses to invest in the economy, while Democrats and economists argue that the benefits primarily lie with the wealthy, leading to increased income inequality and debt.

Ultimately, the decision lies within lawmakers in Washington D.C., who must weigh the benefits and drawbacks of making the tax cuts permanent to benefit the country’s economic future. In conclusion, the midterm elections and other factors have brought about significant changes that will impact consumers’ wallets.

From minimum wage hikes to taxes and interest rate increases, consumers need to prepare themselves properly. Besides, the proposal to make tax cuts from the Tax Cuts and Jobs Act permanent has raised debates, with Republicans arguing it will promote economic growth and Democrats warning of increased income inequality and debt.

Whatever the outcome of these changes, it is essential to stay informed and take measures to safeguard one’s financial well-being.

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