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Sunday, October 1, 2023

Updates On The Present Financial Situation As Federal Stimulus Checks Dry Up: States Declare Multiple Measures As Inflation Peaks

While most of the COVID-19 relief stimulus checks provided by the federal administration to individuals were disbursed through 2020 and 2021. But they will continue to affect our finances in 2022.

The Economic Impact Payment, or the third stimulus check, under the American Rescue Plan act of 2021, provided multiple support to American citizens as the pandemic continued to rage for the second year.

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Along with the third stimulus check, there were the changes in unemployment insurance, the loan pause in federal student loans, and the enhanced child tax credit that was increased from $2,000 a year to between $3,000 and $3,600 max depending on the age of the child, were all part of the relief measures announced by the federal government last year. Apart from the pause in loan, none of the other measures are in force in 2022.

The Crash In The Cryptocurrency Market Contributed To The Crisis

It was more than a decade back that the first cryptocurrency, Bitcoin, burst on the horizon, and despite the collapse this month, $1,000 invested then would still be worth over $350M at present, down from $625M. The crash occurred at a particularly difficult time as the US economy continued to reel from the high inflation rate.

While the direct crash has been attributed to the crash of the stablecoin Terra as it lost its peg to the USD. But the ultimate causes were more complex and numerous. It included rising interest rates and inflation that destabilized financial markets on the whole and as tech securities became more volatile.

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Bitcoin and other cryptocurrencies have come down to half of what it was in the fall of 2021.

With the federal administration having transitioned its expenditure focus from stimulus checks to infrastructure, most states have taken up the slack and have offered stimulus proposals of their own in 2022.

Most states have yet to get off the mark with their legislative measures and are only plodding on the proposal states. Given the deep chasm at present between the Democrats and the Republicans, getting any bill through is sure to be a Herculean task.

But some states have already moved ahead and have signed the bill to allow stimulus checks to their residents. Each state has come up with packages that vary in the amount and the people who will come under its cover.

Many States Have Already Passed Laws To Give Stimulus Checks To Residents

California was the first off the mark initially with the stimulus checks. It gave two stimulus checks, Golden State Stimulus I and II for a total expenditure of over $9B. This was revealed through a press announcement from Governor Gavin Newsom.

The governor’s office also revealed that the administration would be sending $400 to each owner of a vehicle with a boundary of $800 to counterbalance the rising prices of gasoline.

The governor of Georgia, Brian Kemp, freshly approved and signed into law a stimulus check for state residents as tax refunds. While individual taxpayers’ would get a one-off stimulus check worth $250, married couples who file jointly would receive double that amount, while heads of households would receive $375.

Governor David Ige of Hawaii had initially proposed a refund of a $100 check to all taxpayers and their dependents. But months later, the Hawaiian legislature accepted a bill that gives a $300 stimulus check to taxpayers earning below $100,000 while those earning above it would receive $100.

This piece of legislation will only need the support of the Governor, who has in the past signaled his backing for the bill.

The residents of Idaho will receive a tax rebate and direct deposits, which are expected to be the greatest of 12% of the tax returns for 2020 or $75.

The Democratic ruling members of Illinois have proposed a statewide stimulus check that should be received by September. This stimulus payment should be $100 for individuals while every dependent would receive $50. Each household is also eligible for a stimulus payment of $300 in property relief tax.

The proposal will also cover the issue of freezing further tax rises and towards this end, gas and grocery taxes could be frozen for 6 months while school supplies could see a tax freeze for a brief period of 10 days in August.

The governor of Maine, Janet Mills, has projected sending a one-time stimulus check of $850 to residents earning less than $100,000. This was revealed in a press release by the governor’s office, which further stated that this money was being paid from the $682M surplus budget of the state.

The governor of New Jersey, Phil Murphy, has suggested a $500 stimulus check for low-income earners. Residents should have filed their recent income tax return using a tax ID and not their Social Security number. This is part of an effort by the New Jersey administration to embrace undocumented immigrants.

Over 100,000 New Jersey residents will qualify for state assistance, figures released by the Treasury Department of the state have revealed.

Single tax filers in the state of New Mexico will receive a stimulus check worth $250 if their annual earnings are below $75,000. For Joint filers, the corresponding figure is $150,000, and they will receive a $500 stimulus payment.

The state will also provide other reliefs, including a $1,000 credit for whole-time nurses at the hospital and a refundable child tax credit stimulus of $175.

The governor of New York, Kathy Hochul, has proposed a rebate on property tax that is between $425 and $970 for low-income and middle-income households in the state. This was revealed in a recent press release on tax rebates allowed to residents of New York.

The state has also shored up plans to provide tax rebates for business owners and will also be bringing down taxes on gasoline.

The legislature in Virginia has proposed a one-off payment of $300 to all taxpayers in Virginia.

The legislature is also working on two separate bills that seek to suspend the gas tax in the state for one year and also suspend or totally eliminate the tax on groceries in the state.

Many economists have argued that putting money directly into the pockets of citizens played a big part in the sudden rise in the inflation rate. With over $20B in extra funds circulating in the economy, inflation was 7.5% higher in January 2022 than a year ago.

While the stimulus check and the recovery bills were necessary for one state to prevent an economic downfall, the influx of more money into the hands of people to spend on the same services and goods led to prices going up to arrest the demand.

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