Washington's too crazy for me—that's what I always thought, walking past a TV blaring out the latest political antics. Until COVID-19 hit me, and when it did, every Washington move became like a stone a politician threw in a big pond whose ripples inevitably affected my lifestyle. So, I started paying attention, not because it was interesting, but because I was scared. I wish we were in the clear, but we are not over this crisis yet. Too many talented salon friends report a decrease in their income because of fewer clients' visits.
Let's start with the good news: yes, the vaccine, plus by now, we know how to stay relatively safe with distancing and sanitation, and now the financial support from Washington and your state may really make a difference. Please don't stop reading this; that's what I would have done before. You can use some good news to live better and be more secure—but you have to be aware of them, right? Read on.
The new Administration's proposals can have a definite impact on salon professionals. Too many of my female stylist friends with children struggle without daycare. They can now get assistance from the new childcare proposals explained below. Those owing student loans will get a breather from a freeze on student loan payments and interest. Others will sleep better knowing there's a ban on evictions, and many others will bring more money home by raising the minimum wage to $15 an hour.
Now read this: some proposals will be instantly implemented by executive order. Other programs need approval by Congress, which means a back and forth between Dems and Reps, and a compromise version might emerge. This finagling can take a couple of months, so don't hold your breath.
The ideas below are, as of this writing (February 2, 2021), part of the 1.9-trillion-dollar budget. Most of these will take a couple of months to work their way through Congress.
Increase stimulus checks to $2,000. President Biden calls for more than $1,400 to bring the recent stimulus checks to $2,000 per person. If you earned $75,000 or less a year, you would receive an added $1,400 besides the $600 you already received. If you didn't get your $600, you could deduct it from your tax return this April.
This time, your adult dependents would qualify for the direct payments. Previously, only child dependents in qualifying households who were under 17 could receive a stimulus check. Mixed status households, where one spouse does not have a valid Social Security number, would also be eligible under Biden's plan. In those families, spouses and children with Social Security numbers would qualify.
Boost weekly unemployment benefits an added $400. The proposed $1.9 trillion Covid relief package, the American Rescue Plan, would boost unemployment benefits by $400 a week through September. Check with your state unemployment office for details.
Freeze on evictions. The Centers for Disease Control and Prevention (CDC) has been directed to implement a nationwide ban on evictions through March 2021. The executive order went into effect at once in January and extended the foreclosure moratorium on government-backed mortgages, including those backed by the USDA, VA, and HUD. It allows homeowners to apply for mortgage forbearance if they need it.
If you owe back rent, the Adminsitration wants $30 billion in rental help and another $5 billion to help those experiencing a risk of homelessness find housing. About 14 million Americans are behind on their rent because of the pandemic crisis. Look for Biden to request keeping the moratorium in place through September 2021.
Raise the federal minimum wage to $15, up from $7.25 per hour. The federal minimum wage was last raised on July 24, 2009, when it rose from $6.55 to $7.25 per hour. Keep an eye on this one because it will face opposition by most Republicans and likely will end up with a lower compromise amount.
Increase the child and dependent care tax credit to a maximum of $4,000 for one child under age 13, or $8,000 for two or more children. Families earning between $125,000 and $400,000 in income will receive a partial credit.
Create a $25 billion to help childcare centers stay open and expand childcare help by $15 billion to subsidize childcare for low-income families. Millions of children go without childcare. Parents are left to choose between caring for their children or putting food on the table. Women are particularly hit when no childcare is available. According to an analysis by the National Women's Law Center, the proof is how women accounted for 100% of the lost jobs in December 2020.
Student Loans. The President wants to extend the student loan payment pause and interest waiver for federal student loans through at least September 2021. There are growing calls to forgive a part of the country's $1.7 trillion in outstanding student loan debt, but this was not included in his stimulus package. Biden would like to cancel $10,000 from every student loan, but this was not part of Congress's plan.
The Administration proposed a return to the 39% top tax rate from its current level of 37% and the President pledged no new taxes on anyone making less than $400,000. The wealthy will face higher taxes. Individuals can currently gift or make a bequest of $11.7 million, or $23.4 million for a married couple, before facing the 40% estate or gift tax.
If you are a salon owner and run it as a corporation, the corporate rate would rise from 21% to 28%; a 15% alternative minimum tax would apply to corporate book income of $100 million and higher.
Benefit increases are a part of the President's plan. Eligible workers would get a guaranteed minimum benefit equal to at least 125% of the federal poverty level. Those who have received benefits for at least 20 years would receive a 5% increase. Widows and widowers could get approximately 20% more than a month.
Stay focused on making the most of your hard-earned dollars by saving 10% of every deposit you make to your accounts. I do it automatically. Hang in there, I'm standing right next to you.
Carlos Valenzuela is a hairdresser, author, success coach, ex-salon & beauty school owner. His latest e-book The Thrifty Cosmetologist, is a simple approach to money smarts tailored to salon pros. Visit us on Facebook.
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Originally posted on Modern Salon