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Biggest Cyber Monday Ever

January 5, 2018 By Twila Van Leer

The phenomenon that has changed the face of shopping in American — doing it online — proved itself well entrenched when Cyber Monday took place on the first Monday after Thanksgiving. When all the calculations are completed, the day devoted to electronics-related items may well have set new records.

Adobe Analytics, the research arm of giant software maker Adobe, reported that as of 4:30 p.m. on Cyber Monday, some $3.4 billion in sales had been recorded, a 17 percent increase over the 2016 Cyber Monday. Web traffic from mobile devices also took an uptick, surpassing desktop computers for the first time. Even a seasoned expert such as Frank Yanover, retired Amazon exec, found he could be persuaded by what they found online. He bought a Vitamix blender for $300, a $200 discount. He also succumbed to a deal from Best Buy for an iPad, ordering by phone and then picking it up from a nearby store. He finished up his unscheduled online spree with his voice-activated Echo by purchasing Amazon’s Echo Dot for $30 — a $20 reduction.

Echo Dot was, in fact, Amazon’s top-selling electronic item for Cyber Monday, followed by Fire TV board games, Fingerlings and Legos over in the kid’s section.

At eBay, they were selling a $745 Apple MacBook Air every five seconds. J.C. Penney reported its top-selling Website item were towels, $25 diamond stud earrings and Liz Claiborne handbags (which, incidentally, features a built-in phone charger. What’ll they think of next?)

Walmart, which has been trying to play catch-up with Amazon, offered three times the number of items online that it did last year, but Amazon appeared likely to retain the record, with 50 percent of all online sales growth this year.

Overall the most popular items sold online during Cyber Monday were computers and small electronics, followed by clothing, according to America’s Research
Group. Ease of shipping is a factor.

People who actually showed up in a store were almost the exception. Parking areas in some of the most popular stores were only half full as shoppers stayed away in droves to do their shopping in the convenience of their homes or offices. Of course, for those who still want the store experience, that means fewer shoppers to compete with.

What Updated Child Tax Credits Mean

January 3, 2018 By Twila Van Leer

In American families, down there where the rubber hits the road, there is a lot of concern about what Congressional tinkering with child tax credits will do in the long run. It won’t be apparent until the new laws actually kick in, but what seems on the surface to be breaks for people in the low- to moderate-income brackets could prove to be of little help to millions of families.

The tax revision bill as it passed recently, allows families in low-income brackets to claim more in per-child credits. The credit was $1,000 per child and now it is $2,000. If the household tax liability is below zero, the credit is refundable as a tax return.

Sounds good, but tax experts say the expanded tax credit may actually provide little relief for poor families. It’s complex.

Until now, families could claim the credit for each child under 17 whom they housed and provided for for six months in the relevant year. The credit began to phase out when gross income reached $75,000 for a single parent or $110,000 for couples. The proportion of families that received the credit and the average amount of the credit is now higher among moderate- and middle-income households than in low-income households, according to the Tax Policy Center. Even so, the credit helped some 2.7 million taxpayers in 2016.

So now the credit has been raised to $2,000 per child and the income thresholds have been raised to $200,000 for single taxpayers and $400,000 for couples. For families who earn too little to owe taxes, the bill allows a refund of up to $1,400. These provisions are due to expire in 2026. The bill also requires that parents seeking the child credit to provide a Social Security number for the child, a move calculated to deny the credit to illegal aliens. It is estimated that some 1 million children would be harmed by that provision.

On the surface all of this is good news for American families, but the provisions will provide little help for lower-income families, some tax experts say. Because of how the rules are written, some 10 million children are likely to receive only a token increase — up to $75 per family, they say. That’s because the refundable portion of the credit doesn’t become effective until the family has income of $2,500. For each additional dollar earned the family receives a refundable credit worth 15 cents until it reaches the maximum credit of $1,400. Many families are likely never to come close to the necessary income level.

The increased child credits also will be offset by the new tax bill’s elimination of personal exemptions. Until now, taxpayers could deduct from their income a $4,050 exemption for himself or herself and for each dependent. No longer will that benefit be available.

Some Companies to Share Tax Windfalls With Employees

January 1, 2018 By Twila Van Leer

Companies Share Tax Windfalls With Companies — The expectation is that the tax revisions will lead to higher profits, bigger dividend payments and share buybacks.

Some major American companies are announcing that they want to share the tax benefits they will get under the revised plan recently passed by Congress along with their employees. Analyses of the new tax plan show that the largest taxpayers, which include the companies, will reap the greatest relief, while middle- and lower-class taxpayers will see little effect.

AT&T, Comcast, Wells Fargo and Boeing are among the companies that have announced their intention to find ways to share the benefit with their employees.

Skeptics say such moves amount to public relations gestures, token steps to take the sting out of what they see as the inequitable rearrangement of tax brackets. The amount of money the companies will pass along to employees is a drop in the bucket in comparison to what they will acquire under the new law, they say.

The stock market reflects that sentiment. It has risen since the law passed, based on the premise that the savings will go to investors rather than to workers. The expectation is that the tax revisions will lead to higher profits, bigger dividend payments and share buybacks.

The revised tax plan reduced the corporate rate from 35 percent to 21 percent. It also created a provision that would exclude many foreign profits from taxation, another break for many of the large companies.

AT&T announced that it will pay a $1,000 bonus to each of its 200,000 workers once the law becomes effective. President Trump praised the action. But the token of generosity came when the Justice Department is suing to block a proposed merger between AT&T and Time Warner. Trump has declared that such merger of the communications giants would be bad for the country. The president said AT&T’s gesture is an indication that the $1.5 trillion tax cut will trickle down to the middle classes.

It is anticipated that other companies may jump on the bandwagon, coming up with ideas about how they can share the windfall they will reap from the new tax laws. Comcast already has announced it will follow AT&T’s lead in offering $1,000 bonuses to more than 100,000 employees. Wells Fargo has taken a different approach, raising its minimum wage to $15 per hour. The banking firm also will donate $400 million to charitable and community organizations.

Boeing’s plan is to put $300 million into enhanced job training, facility upgrades and charitable efforts.

But overall, such schemes to share the windfall with employees will remain “the exception, not the rule,” according to Senate Minority Leader Chuck Schumer.

As the Institute on Taxation and Economic Policy, a liberal watchdog organization noted, many of the large corporations have been holding large cash holdings for years that could have gone to workers. Boeing, for example, had $8.8 billion at the end of 2016. The company could have made a goodwill effort for employees at any time, the institute said.

Another indication that the large corporations recognize the huge benefit they will realize is the announcement of share buybacks amounting to $83.7 billion, Schumer’s office reported.

Holiday Sales Grow From 2016

December 30, 2017 By Twila Van Leer

The 2017 holiday shopping season appears to be a very good one for America’s retailers, many of whom have not had much reason in recent years to be merry. The successful end-of-the-year selling shows that traditional retailers are adapting to the shift to online buying.

The tax overhaul recently passed by Congress could signal more shifts in shopping as ordinary Americans figure out how the changes might affect them and their ability to spend. If they are in the brackets that might benefit from the tax re-do, they might spend more. Or they might put the “savings” into savings.

As the year wound down, it appeared that the 2017 holiday season would stack up very well against previous years. One factor is that unemployment is at a 17-year low, contributing to the highest level of consumer optimism in years. The current spending spree is the most intense since the recession that is now about 10 years in the past.

Consumers are not only spending more this year, but they are putting more of their money into electronics, clothing and toys to a greater extent, according to the National Retail Federation. The federation noted with elation that the week before Christmas, the most critical time for retailers, saw a lot of traffic in stores. Many retailers see 20 percent of their foot traffic during that week. The fact that there was a full weekend immediately before Christmas also boded well for the industry, as late shoppers continued to flood the stores in search of last-minute gifts and stocking stuffers.

Most online shoppers have completed their buying before the last week to allow time for deliveries. They then are more likely to show up in the stores, bypassing the convenience of online shopping for the assurance that their gifts will be on time. Even so, the numbers of shoppers buying online continues to grow. Now, the growth in online sales is about double that level at stores, according to First Data, a payment technology firm. Online giant Amazon accounts for a considerable amount of the growth. Amazon has expanded into new areas, putting more categories of retailers on alert. The firm reported that its Cyber Monday sales tallied the highest in its history. Estimates are that Amazon accounted for more than 60 percent of the total sales for that day.

Some families have begun exchanging “wish lists” before the holidays, consisting of many web links. The shopping then becomes easier and the satisfaction with gifts more consistent.

Stores are responding to the online onslaught by offering more weekend deals and upping their loyalty programs.

And The Rich Get Richer

December 26, 2017 By Twila Van Leer

All over the world, one economic fact remains the same. The most rich people in every country continue to get richer and the poor share less of the wealth. Recent global statistics show that the wealthiest 1 percent of the population saw twice as much growth as those in the bottom half.

The middle class, which exists primarily in North America and Europe, has seen the most slippage over the past 40 years, according to the World Inequality Report 2018. While globalization of some industries has significantly raised incomes for hundreds of millions of people, particularly in China and India, that has been accomplished at the expense of manufacturing and other middle-income workers in the developed world.

The report is prepared by an international team of notable economists. In past reports, they have chronicled the increasing gap between the poor and the wealthy in the United States. The top 1 percent on the wealth scale held about 10 percent of the country’s wealth, the 1980 report showed. By 2016, that figure had risen to 20 percent. In Europe for the same time frames, the top 1 percent had gained less, showing just a 12 percent income share.

The researchers attributed the growing gap in the United States to less progressive tax policies. European countries tended to favor more support for education, which in turn enhanced earning power for the middle and lower classes in those countries.

The tax legislation recently passed in the United States will be most damaging to the country’s middle and low-income classes, most economists agree.