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RBA interest rates: Otivo reveals the Perth postcodes set to be hardest hit by mortgage stress

RBA interest rates: Otivo reveals the Perth postcodes set to be hardest hit by mortgage stress

Almost a quarter of a million WA homeowners will find themselves in the grips of mortgage stress as interest rates continue to climb, with little sign of a slowdown on the horizon.

The Reserve Bank on Tuesday announced that it would lift its official interest rate by 50 basis points to 1.85 per cent for the fourth month in a row.

The cash rate target has now increased by 1.75 percentage points since the start of May to 1.85 per cent, with the hike expected to add about $472 a month to repayments on a $500,000 loan, with Commonwealth Bank the first of Australia’s big four banks making the move to hit borrowers with the full increase.

With families across Australia already struggling under the weight of the surging cost of living, new data suggests the move will plunge 1.8 million owner-occupied mortgaged households into financial stress — including 228,621 in WA.

The new report by digital financial advice service Otivo, in partnership with Digital Finance Analytics, surveyed 52,000 households to reveal the real impact of interest rate rises on Australians with owner-occupied mortgages — with a household deemed to be under “mortgage stress” if there is more money going out than in.

The Otivo Mortgage Stress Report stated that at the end of July 2022, more than 1.7 million (or 45 per cent) of Australians were already suffering under mortgage stress.

More than 1.8 million Australians will suffer off the back of the RBA’s latest cash rate hike.

The report further predicted Tuesday’s RBA announcement would force an additional 140,839 Australians into the same boat, bringing the total to 1.8 million.

Otivo then drilled down to reveal the top three postcodes in each State or Territory expected to feel the most significant impact off the back of the latest cash rate hike.

The report revealed some of Perth’s most affluent suburbs would soon be hit with mortgage stress, with homes in some of the city’s most prestigious areas warned to curb spending and brace themselves for the bleak outlook.

An eyewatering 59 per cent (or 1760) households in postcode 6153 (Applecross, Ardross, Brentwood, Mount Pleasant) are expected to fall victim to mortgage pain, with the latest rise pushing an additional 644 homes into stress compared with July’s numbers.

Second on the list is 6152 (Como, Karawara, Manning, Salter Point, Waterford), with an extra 580 households bringing the total number of homeowners under stress to 2087.

Further south, 518 more homes in Mandurah’s 6210 postcode area (Coodanup, Dudley Park, Erskine, Falcon, Greenfields, Halls Head, Madora Bay, Mandurah, Meadow Springs, San Remo, Silver Sands, Wannanup) will take the total number in the 6210 postcode area to 3623 homeowners.

Otivo chief executive Paul Feeney said the mortgage stress report reiterated the need for Australians to seek personal financial advice, regardless of what interest rates and inflation do over the coming months.

“With Australians looking down the barrel of the rising cost of living and higher interest rates, and more than 1.8 million Australians set to be suffering from mortgage stress off the back of the RBA’s latest cash rate hike, now more than ever Australians need quality and affordable financial advice to help them stay on top of their finances,” he said.

Mr Feeney’s top tips for Australians under financial pressure due to mortgage stress

Review or create a budget—Understand what money is coming in and what money is going out. What are the non-negotiable costs (such as your mortgage, utilities, groceries and transport costs) and where can you cut back. If you want to avoid mortgage stress, you’ll need to make some small changes to your monthly spending patterns.

Understand the benefit of an offset or redraw — If you have a mortgage, put spare cash into an offset account or redraw facility. This lowers your loan balance that interest is charged on, saving you money each month.

Discuss your mortgage with your lender — If you’re concerned about interest rate rises, discuss this with your lender and understand if there is an opportunity to get a better rate. Banks are often open to helping their clients if they are under financial stress. You will have to make it up eventually but this may provide some short-term relief for your household right now.

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US

China fires missiles near waters off Taiwan as live-fire drills intensify

China fires missiles near waters off Taiwan as live-fire drills intensify



CNN
—

China fired multiple missiles toward waters near northeastern and southwestern Taiwan on Thursday, the island’s Defense Ministry said, as Beijing makes good on its promise that Taipei will pay a price for hosting US House Speaker Nancy Pelosi.

The Chinese military’s Eastern Theater Command said in a statement that multiple missiles had been fired into the sea off the eastern part of Taiwan. It said all the missiles hit their target accurately.

“The entire live-fire training mission has been successfully completed and the relevant air and sea area control is now lifted,” China’s statement said. Earlier, the Eastern Theater Command said it had conducted long-range, live-fire training in the Taiwan Strait, state broadcaster CCTV reported, as part of planned military exercises around the island.

Taiwan reported Chinese long-range rockets had fallen near its islands of Matsu, Wuqiu, Dongyin, which are in the Taiwan Strait, but located closer to the mainland than the main island of Taiwan. It later said a total of 11 Dongfeng (DF) missiles were fired to the waters north, south and east of the island between 1:56 pm and 4 pm local time (from 1:56 am ET to 4 am ET) on Thursday.

Chinese state media said that exercises to simulate an air and sea “blockade” around Taiwan had started Wednesday, but offered little solid evidence to back up the claim. Later Thursday, images showed military helicopters flying past Pingtan island, one of Taiwan’s closest points to mainland China.

The military posturing was a deliberate show of force after Pelosi left the island on Wednesday evening, bound for South Korea, one of the final stops on an Asia tour that ends in Japan this weekend.

Within hours of her departure from Taipei on Wednesday, the island’s Defense Ministry said China sent more than 20 fighter jets across the median line in the Taiwan Strait, the midway point between the mainland and Taiwan that Beijing says it does not recognize but usually respects.

Tourists look on as a Chinese military helicopter flies past Pingtan island, one of mainland China's closest point from Taiwan on August 4, 2022.

On Thursday, Taiwan’s Defense Ministry said its military was remaining in a “normal” but wary posture, and called the live-fire drills an “irrational act” that attempted to “change the status quo.”

“We are closely monitoring enemy activities around the sea of ​​Taiwan and that of outlying islands, and we will act appropriately,” the ministry said in a statement.

Taiwan also accused China of “following North Korea’s example of arbitrary test-fire of missiles in waters close to other countries” in a statement issued by its Ministry of Foreign Affairs on Thursday.

The exercises have caused disruption to flight and ship schedules, with some international flights canceled and vessels urged to use alternative routes for several ports around the island.

Well in advance of Pelosi’s near 24-hour visit to Taiwan, China had warned her presence was not welcome. The ruling Chinese Communist Party claims the self-governed island as its own territory, despite never having controlled it.

China issued a map showing six zones around Taiwan that would be the site of drills in coming days. But on Thursday, Taiwan’s Maritime and Port Bureau said in a notice that China had added a seventh military exercise area for ships and aircraft to avoid “in the waters around eastern Taiwan.”

Chinese state media on Thursday outlined a broad range of objectives for the exercises, including strikes on land and sea targets.

“The exercises (are) focused on key training sessions including joint blockade, sea target assault, strike on ground targets, and airspace control operation, and the joint combat capabilities of the troops got tested in the military operations,” said an announcement from the Xinhua news agency attributed to the People’s Liberation Army’s (PLA) Eastern Theater Command, which has responsibility for the areas near Taiwan.

Chinese military helicopters fly past Pingtan island in Fujian province on Aug. 4.

Meanwhile, the Global Times tabloid said the drills involved some of China’s newest and most sophisticated weaponry, including J-20 stealth fighters and DF-17 hypersonic missiles, and that some missiles may be fired over the island – a move that would be extremely provocative.

“The exercises are unprecedented as the PLA conventional missiles are expected to fly over the island of Taiwan for the first time,” the Global Times said, citing experts.

“The PLA forces will enter areas within 12 nautical miles of the island and the so-called median line will cease to exist.”

Accounts from Taiwan of Chinese military movement included the fighter jets crossing the median line and a report from Taiwan’s government-run Central News Agency, citing government sources, that two of China’s most powerful warships – Type 55 destroyers – were sighted Tuesday off the central and southeastern coast of the island, the closest being within 37 miles (60 kilometers) of land.

But there was little corroboration or firm evidence provided by China to back up the sort of claims posted in the Global Times.

China’s state-run television offered video of fighter jets taking off, ships at sea and missiles on the move, but the dates of when that video was shot could not be verified.

Some analysts were skeptical Beijing could pull off what they were threatening, such as a blockade of Taiwan.

“The official announcement (of the blockade) refers to just a few days, which would make it hard to qualify it on practical terms to a blockade,” said Alessio Patalano, professor of war and strategy at King’s College in London.

“Blockades are hard to execute and long to implement. This exercise is not that,” he said.

Patalano said the biggest impact of the exercises would be psychological.

“During the period of time in question, ships and aircraft will likely reroute to avoid the area, but this is one primary objective of the chosen locations: create disruption, discomfort, and fear of worse to come,” he said.

Chinese military helicopters fly past Pingtan island, one of mainland China's closest point from Taiwan on August 4, 2022.

China’s retaliatory exercises have already caused disruption to flight and ship schedules in Taiwan, though the island is trying to lessen their impact.

Taiwan’s transportation minister said agreements had been reached with Japan and the Philippines to reroute 18 international flight routes departing from the island – affecting about 300 flights in total – to avoid the PLA’s live-fire drills.

Korean Air told CNN on Thursday that it has canceled flights from Incheon to Taiwan scheduled for Friday and Saturday due to safety reasons while China conducts its military drills. Flights will resume on Sunday.

On Wednesday, Taiwan’s Maritime and Port Bureau issued three notices, asking vessels to use alternative routes for seven ports around the island.

China’s planned live-fire drills were also causing unease in Japan.

Japan’s chief cabinet secretary, Hirokazu Matsuno, said the drills posed a threat to his country’s security.

One of the six exercise areas set up by China was near Japan’s Yonaguni Island, part of Okinawa prefecture and only 68 miles (110 kilometers) off the coast of Taiwan.

That same Chinese exercise zone is also close to the Japanese-controlled Senkaku Islands, a rocky uninhabited chain known as the Diaoyus in China, and over which Beijing claims sovereignty.

“In particular, a training area has been set up in the waters near Japan, and if China were to conduct live ammunition exercises in such an area, it could affect the security of Japan and its people,” Matsuno said.

Meanwhile, the United States military was silent on the Chinese exercises and did not provide any answers to CNN questions on Thursday.

Pelosi met Taiwanese President President Tsai Ing-wen in Taipei on Aug. 3.

Besides keeping a close eye on Chinese military movements around the island, Taiwan also said it would strengthen security against cyberattacks and disinformation campaigns.

Taiwan’s cabinet spokesperson Lo Ping-cheng said in a Wednesday news conference that the government had enhanced security at key infrastructure points and increased the level of cybersecurity alertness across government offices.

Taiwan is anticipating increased “cognitive warfare,” referring to disinformation campaigns used to sway public opinion, Lo said.

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Categories
US

Why IRS’ $80B expansion is a ‘nightmare’ for small businesses

Why IRS' $80B expansion is a 'nightmare' for small businesses

Small business owners may soon be in for a lengthy and expensive battle with the IRS, tax experts warn.

A key provision in the Inflation Reduction Act — which throws an extra $80 billion to the IRS to improve the agency’s collection of under-reported income — will end up targeting small business owners to pay for the legislation, according to nonpartisan watchdog the Joint Committee on Taxation.

The group estimates that between 78% and 90% of the estimated additional $200 billion the IRS will collect will come from small businesses making less than $200,000 annually.

Just 4% to 9% would come from businesses making north of $500,000 a year — meaning the legislation is in sharp contrast to President Biden’s longstanding claim that he wouldn’t raise taxes on anyone making less than $400,000.

“The IRS will have to target small and medium businesses because they won’t fight back,” Joe Hinchman, executive vice president at the National Taxpayers Union Foundation, told The Post. “We’ve seen this play out before … the IRS says ‘We’re going after the rich’ but when you’re trying to raise that much money, the rich can only get you so far.”

I.R.S.
Increasing the number of IRS agents could hurt small businesses most.
Getty Images

In fact, going after the lower and middle class can actually be more lucrative for IRS auditors than trying to get more money from the wealthy. “The rich have their lawyers and fight it — that’s why the poor are easier to go after,” Hinchman adds.

Accordingly, tax experts warn that the IRS’s audits will be far more painful and costly for small business owners — even for those who think they’re filing their taxes correctly.

manchin
Sens. Joe Manchin and Chuck Schumer have reached a deal that would give the IRS an extra $80 billion.
Getty Images

“Most small businesses aren’t doing anything wrong,” Daniel Bunn, executive vice president at the Tax Foundation, told The Post. “We don’t make the tax code simple and the complicated tax code makes it difficult for small business owners to comply with all the requirements.”

Even if small business owners get everything right, they may still be faced with a headache since part of the IRS expansion will involve sending out more notices and letters to businesses, Bunn adds. For individual contractors or small businesses, an IRS letter that they owe more money or made an error on their taxes can put them underwater.

“Anytime you get an IRS letter, it could take months or years to get it settled — we’re talking many thousands of dollars to address,” Bunn added. “Large companies have constant reviews and lawyers going through everything… small business doesn’t have the resources to fight back in the way.”

The White House has dismissed claims the bill will hurt lower- and middle-income Americans, instead noting the JCT estimate doesn’t take into account how much the bill will offset costs for average Americans like prescription drugs.

But tax experts aren’t so sanguine about the reality of giving the IRS more resources.

“The approach here is to double the IRS workforce, take the leash off, and see how much they can collect,” Hinchman adds. “I think they’ll collect it but it will be quite painful.”

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Categories
US

In S. Korea, Pelosi avoids public comments on Taiwan, China

In S. Korea, Pelosi avoids public comments on Taiwan, China

SEOUL, South Korea (AP) — After infuriating China over her trip to Taiwan, US House Speaker Nancy Pelosi met South Korean political leaders in Seoul on Thursday but avoided making direct public comments on cross-Strait relations that could have further increased regional tensions.

Pelosi, the first incumbent House speaker to visit Taiwan in 25 years, said Wednesday in Taipei that the American commitment to democracy on the self-governing island and elsewhere “remains ironclad.” In response, China announced it would launch its largest military maneuvers aimed at Taiwan in more than a quarter of a century.

After visiting Taiwan, Pelosi and other members of Congress flew to South Korea — a key US ally where about 28,500 American troops are deployed — on Wednesday evening, as part of an Asian tour that included stops in Singapore and Malaysia.

She met South Korean National Assembly Speaker Kim Jin Pyo and other senior members of Parliament on Thursday. After that hour-long meeting, Pelosi spoke about the bilateral alliance, forged in blood during the 1950-53 Korean War, and legislative efforts to support a push to boost ties but did n’t directly mention her Taiwan visit de ella or the Chinese protests.

“We also come to say to you that a friendship, a relationship that began from urgency and security, many years ago, has become the warmest of friendships,” Pelosi said in a joint news conference with Kim. “We want to advance security, economy and governance in the inter-parliamentary way.”

Neither Pelosi nor Kim took questions from journalists.

Kim said he and Pelosi shared concerns about North Korea’s increasing nuclear threats. He said the two agreed to support their governments’ push to establish denuclearization and peace on the Korean Peninsula based on both strong deterrence against North Korea and diplomacy.

Later in the day, Pelosi planned to visit an inter-Korean border area that is jointly controlled by the American-led UN Command and North Korea, a South Korean official said requesting anonymity because he wasn’t authorized to speak to media on the matter .

If that visit occurs, Pelosi would be the highest-level American to go to the Joint Security Area since then-President Donald Trump went there in 2019 for a meeting with North Korean leader Kim Jong Un.

Sitting inside the 4-kilometer (2.5-mile)-wide Demilitarized Zone, a buffer created at the end of the Korean War, the JSA is the site of past bloodshed and a venue for numerous talks. US presidents and other top officials have often traveled to the JSA and other border areas to reaffirm their security commitment to South Korea.

Any critical statement from North Korea by Pelosi is certain to draw a furious response from Pyongyang. On Wednesday, the North’s Foreign Ministry slammed the United States over her Taiwan trip, saying that “the current situation clearly shows that the impudent interference of the US in internal affairs of other countries.”

Pelosi will speak by phone Thursday afternoon with South Korean President Yoon Suk Yeol, who is on a vacation this week, according to Yoon’s office. No face-to-face meeting has been arranged between them. Yoon, a conservative, took office in May with a vow to boost South Korea’s military alliance with the United States and take a tougher line on North Korean provocations.

Pelosi’s Taiwan visit has angered China, which views the island nation as a breakaway province to be annexed by force if necessary. China views visits to Taiwan by foreign officials as recognizing its sovereignty.

“Today the world faces a choice between democracy and autocracy,” Pelosi said in a short speech during a meeting with Taiwan’s President Tsai Ing-wen on Wednesday. “America’s determination to preserve democracy, here in Taiwan and around the world, remains ironclad.”

The Biden administration and Pelosi have said the United States remains committed to the so-called one-China policy, which recognizes Beijing but allows informal relations and defense ties with Taipei. The administration discouraged but did not prevent Pelosi from visiting.

The military exercises that China launched in response to Pelosi’s Taiwan visit started Thursday, the Chinese military said. They were expected to be the biggest aimed at Taiwan since 1995, when China fired missiles in a large-scale exercise to show its displeasure over a visit by then-Taiwanese President Lee Teng-hui to the US

China also already flew fighter jets and other war planes toward Taiwan, and blocked imports of citrus and fish from Taiwan.

Tsai pushed back firmly against Beijing’s military exercises, parts of which will enter Taiwanese waters.

“Facing deliberately heightened military threats, Taiwan will not back down,” Tsai said at her meeting with Pelosi. “We will firmly uphold our nation’s sovereignty and continue to hold the line of defense for democracy.”

Taiwan’s Defense Ministry on Thursday called the Chinese drills “unreasonable actions in an attempt to change the status quo, destroy the peace and stability of the region.”

“Our national military will continue to strengthen its alertness level, and every squadron will conduct normally their daily training in their usual places of operation,” it added.

In Washington, National Security Council spokesperson John Kirby sought to tamp down fears. He told ABC’s “Good Morning America” on Wednesday that US officials “don’t believe we’re at the brink now, and there’s certainly no reason for anybody to be talking about being at the brink going forward.”

Addressing Beijing’s threats, Pelosi said she hopes it’s clear that while China has prevented Taiwan from attending certain international meetings, “that they understand they will not stand in the way of people coming to Taiwan as a show of friendship and of support.”

Pelosi noted that congressional support for Taiwan is bipartisan, and she praised the island’s democracy. She stopped short of saying that the US would defend Taiwan militarily and emphasized that Congress is “committed to the security of Taiwan, in order to have Taiwan be able to most effectively defend themselves.”

On Thursday, the 10-nation Association of Southeast Asian Nations called for calm in the Taiwan Strait, urging against any “provocative action.” ASEAN foreign ministers meeting in Phnom Penh, Cambodia for a regional forum said they were concerned the situation could “destabilize the region and eventually could lead to miscalculation, serious confrontation, open conflicts and unpredictable consequences among major powers.”

Pelosi’s focus has always been the same, she said, going back to her 1991 visit to Beijing’s Tiananmen Square, when she and other lawmakers unfurled a small banner supporting democracy two years after a bloody military crackdown on protesters at the square. That visit was also about human rights and what she called dangerous technology transfers to “rogue countries.”

Pelosi’s trip heightened US-China tensions more than visits by other members of Congress because of her position as leader of the House of Representatives. The last House speaker to visit Taiwan was Newt Gingrich in 1997.

China and Taiwan, which split in 1949 after a civil war, have no official relations but multibillion-dollar business ties.

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Wu reported from Taipei Taiwan.

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Associated Press writer David Rising in Phnom Penh, Cambodia contributed to this report.

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US

Restructuring officer for Alex Jones’ business questioned about tens of millions withdrawn from company

Restructuring officer for Alex Jones' business questioned about tens of millions withdrawn from company



CNN Business
—

The accountant now in charge of overseeing right-wing conspiracy theorist Alex Jones’ company Free Speech Systems through its bankruptcy was questioned Wednesday by attorneys for families of Sandy Hook shooting victims over $62 million in funds Jones has drawn from the company over the years.

Free Speech Systems, which runs Jones’ conspiratorial outlet Infowars, filed for bankruptcy protection on Friday, amid proceedings in two states to determine how much Jones owes in damages to families of Sandy Hook victims over his false claims that the shooting was a hoax and they had not actually gone through the experience of losing a child in it.

Marc Schwartz testified he signed a contract to take over as Chief Restructuring Officer for the company in June and now controls all bank accounts, payroll and hiring decisions. Schwartz testified that Jones withdrew about $62 million dollars from the company over 14 years, and testified that $30 million of those withdrawals was paid to the IRS.

Schwartz also testified during the hearing, which ran for more than six hours, that Infowars received about $9 million in cryptocurrency donations and that “they went directly to Mr. Jones.”

Schwartz said during his testimony that Free Speech Systems should be allowed to use cash it has on hand to be able to pay vendors, saying otherwise it will have to shut down.

“If we can’t pay the critical vendors then we will be shut down,” Schwartz said. “The company’s in a situation right now where there’s not a whole lot of breathing room.”

US Bankruptcy Judge Christopher Lopez said Wednesday he would not allow more withdrawals moving forward and that he found some of Schwartz’s testimony “troubling.”

Court documents filed Friday as part of Free Speech Systems’ bankruptcy showed the company has between $10 million and $50 million in estimated assets and between $50 million and $100 million in estimated liabilities. An attorney for Free Speech Systems said at the hearing Wednesday that the company has about $1.3 million cash on hand.

Schwartz stressed the importance of being able to pay vendors that allow the company to broadcast and sell products online, saying that when Jones is not on the air discussing products he sells, the company sees a 30% drop in sales.

“If we can’t broadcast, we can’t sell,” Schwartz said.

Schwartz testified the management structure of Free Speech Systems was not set up the way a successful business should be managed.

“There is Alex and then there is everybody else,” Schwartz testified.

Schwartz said accounting controls were, as far as he could tell after taking control of the company, “nonexistent,” that the people responsible for maintaining the company’s books did not have accounting degrees and that there had been no financial reports produced in at least 18 months when he took over.

Lawyers homed in on Jones’ salary under the bankruptcy plan, saying documents showed Jones’ salary before the bankruptcy was $625,000 a year, and under a restructuring plan, it would amount to about $1.3 million. Schwartz said Jones’ salary could be considered reasonable because of his value to the company.

“Who is more valuable? Nobody,” Schwartz said. Lopez authorized a lower salary for Jones to be paid, of about $20,000 every other week.

When asked how much the company had spent on legal expenses related to the Sandy Hook lawsuits, Schwartz said company records show at least $4.5 million have been spent between 2018 and 2021, but that he does not believe that number is accurate.

Schwartz also testified that Jones used a company-associated American Express card to pay for personal expenses, including housekeeping charges, regularly in the past 18 months. The card had $300,000 a month in charges, but Schwartz said accounting staff did not label what the charges were for.

“We can’t tell you whether it’s for electricity, entertainment or electronic supplies for the production studio,” Schwartz said.

Lopez said he would not authorize the current American Express bill of about $172,000 to be paid.

Schwartz said he didn’t know who Jones was before being hired, and that he doesn’t agree with many of Jones’ views but occasionally consults with him on matters involving the business.

Three smaller companies tied to Jones declared bankruptcy earlier this year, briefly pausing the suits against Jones. But the families suing him dropped those companies from their lawsuits so that the cases could move forward against only Jones and Free Speech Systems. Shortly after, the companies exited bankruptcy protection.

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Categories
US

Why IRS’ $80B expansion is a ‘nightmare’ for small businesses

Why IRS' $80B expansion is a 'nightmare' for small businesses

Small business owners may soon be in for a lengthy and expensive battle with the IRS, tax experts warn.

A key provision in the Inflation Reduction Act — which throws an extra $80 billion to the IRS to improve the agency’s collection of under-reported income — will end up targeting small business owners to pay for the legislation, according to nonpartisan watchdog the Joint Committee on Taxation.

The group estimates that between 78% and 90% of the estimated additional $200 billion the IRS will collect will come from small businesses making less than $200,000 annually.

Just 4% to 9% would come from businesses making north of $500,000 a year — meaning the legislation is in sharp contrast to President Biden’s longstanding claim that he wouldn’t raise taxes on anyone making less than $400,000.

“The IRS will have to target small and medium businesses because they won’t fight back,” Joe Hinchman, executive vice president at the National Taxpayers Union Foundation, told The Post. “We’ve seen this play out before … the IRS says ‘We’re going after the rich’ but when you’re trying to raise that much money, the rich can only get you so far.”

I.R.S.
Increasing the number of IRS agents could hurt small businesses most.
Getty Images

In fact, going after the lower and middle class can actually be more lucrative for IRS auditors than trying to get more money from the wealthy. “The rich have their lawyers and fight it — that’s why the poor are easier to go after,” Hinchman adds.

Accordingly, tax experts warn that the IRS’s audits will be far more painful and costly for small business owners — even for those who think they’re filing their taxes correctly.

manchin
Sens. Joe Manchin and Chuck Schumer have reached a deal that would give the IRS an extra $80 billion.
Getty Images

“Most small businesses aren’t doing anything wrong,” Daniel Bunn, executive vice president at the Tax Foundation, told The Post. “We don’t make the tax code simple and the complicated tax code makes it difficult for small business owners to comply with all the requirements.”

Even if small business owners get everything right, they may still be faced with a headache since part of the IRS expansion will involve sending out more notices and letters to businesses, Bunn adds. For individual contractors or small businesses, an IRS letter that they owe more money or made an error on their taxes can put them underwater.

“Anytime you get an IRS letter, it could take months or years to get it settled — we’re talking many thousands of dollars to address,” Bunn added. “Large companies have constant reviews and lawyers going through everything… small business doesn’t have the resources to fight back in the way.”

The White House has dismissed claims the bill will hurt lower- and middle-income Americans, instead noting the JCT estimate doesn’t take into account how much the bill will offset costs for average Americans like prescription drugs.

But tax experts aren’t so sanguine about the reality of giving the IRS more resources.

“The approach here is to double the IRS workforce, take the leash off, and see how much they can collect,” Hinchman adds. “I think they’ll collect it but it will be quite painful.”

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Categories
Business

Mercedes-Benz dealers seek $650m compensation from German car maker in ‘fight of their lives’

Bob Craig and car photo

Australian Mercedes-Benz dealers are in a $650 million “fight of their lives” against the luxury German car maker in a test case described as one of the most significant in franchise-law history.

Bob Craig sold his dealership of 48 years last year in frustration over Mercedes-Benz’s decision to move to a fixed-price agency sales model.

“I would love to have done 50 years with Mercedes,” Mr Craig said.

“In the last five years, there was a deterioration in relationships between the dealer and the manufacturer.”

Previously, dealers bought cars from Mercedes and could set their own sale price.

But under the agency model, which came into effect in January, the manufacturer retains ownership of the cars while dealers become agents that sell cars at a fixed price for a set commission.

Thirty-eight of the nation’s 55 Mercedes-Benz dealerships have launched legal action against the company in the Federal Court seeking compensation.

Dealers argue they were forced to sign new agency model deals with Mercedes that will dramatically reduce their profits and wipe out years of goodwill with customers.

Mr Craig is not involved in the court case because he sold his business in Orange before the agency model came into effect, but he is speaking on behalf of former colleagues too nervous to publicly criticize Mercedes.

“They’re all shattered, their livelihood is shattered,” Mr Craig said.

Bob and old photo
A photo of Bob Craig’s Mercedes-Benz dealership in Orange from the 1970s.(ABC News: Hamish Cole )

Dealers allege Mercedes hatched a secret plan in 2016 to switch to an agency model, undertook a sham consultation process, and pushed forward with a decision despite the majority of Australian dealers being against it.

They claim that in a bid to capture the profits of dealers, Mercedes has broken Australian Consumer Law by engaging in unconscionable conduct, along with breaching the franchising code’s good-faith provisions.

“This is an incredibly important case for the automotive industry,” Australian Automotive Dealer Association (AADA) chief executive James Voortman said.

“In fact, it’s probably one of the most important franchising cases in Australian history.”

James Voorten
James Voorten says dealers are arguing Mercedes-Benz has engaged in unconscionable conduct and breached its good-faith obligations.(ABC News: Matt Roberts )

Dealers involved in the case are seeking $650 million in compensation from the car marker.

“That takes account of all the millions of dollars of investment that has gone into facilities, but also equipment and the goodwill they’ve created,” Mr Voortman said.

“It’s a large claim, but it’s more than fair.”

“These are regional dealers, these are city dealers, they are Australian businesses, and they’re in the fight of their lives against a big multinational corporation.”

In March 2019, Deloitte modeled the impact of the agency model for dealers.

It found, for example, that under the agency model one particular dealer’s profits would decline by more than 50 per cent compared to the dealership model.

The case against Mercedes, which saw hearings begin in the Federal Court this week, is being funded by dealers involved in the legal battle, including billionaire businessman Nick Politis, the PR company working for AADA has confirmed.

“So many of these dealers have represented the brand for decades, they’ve invested so much money in the brand, and they’ve put in so much work to bring customers to the brand,” Mr Voortman said.

“And now all of that hard work is being taken away with change to a new business model.

“They need compensation for that change, and we hope that the court agrees with that.”

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US

Alex Jones concedes Sandy Hook attack was ‘100% real’

Alex Jones concedes Sandy Hook attack was '100% real'

AUSTIN, Texas (AP) — Conspiracy theorist Alex Jones testified Wednesday that he now understands it was irresponsible of him to declare the Sandy Hook Elementary School massacre a hoax and that he now believes it was “100% real.”

Speaking a day after the parents of a 6-year-old boy who was killed in the 2012 attack testified about the suffering, death threats and harassment they’ve endured Because of what Jones has trumpeted on his media platforms, the Infowars host told a Texas courtroom that he definitely thinks the attack happened.

“Especially since I’ve met the parents. It’s 100% real,” Jones said at his trial to determine how much he and his media company, Free Speech Systems, owe for defaming Neil Heslin and Scarlett Lewis. Their son Jesse Lewis was among the 20 students and six educators who were killed in the attack in Newtown, Connecticut, which was the deadliest school shooting in American history.

But Heslin and Lewis said Tuesday that an apology wouldn’t suffice and that Jones needed to be held accountable for repeatedly spreading falsehoods about the attack. They are seeking at least $150 million.

Closing arguments are expected to begin later Wednesday after more testimony from Jones, who has portrayed the lawsuit as an attack on his First Amendment rights.

Jones is the only person testifying in his own defense. His attorney asked him if he now understands it was “absolutely irresponsible” to push the false claims that the massacre didn’t happen and no one died.

Jones said he does, but added, “They (the media) won’t let me take it back.”

He also complained that he’s been “typecast as someone that runs around talking about Sandy Hook, makes money off Sandy Hook, is obsessed by Sandy Hook.”

Jones’ testimony came a day after Heslin and Lewis told the courtroom in Austin, where Jones and his companies are based, that Jones and the false hoax claims he and Infowars pushed made their lives a “living hell” of death threats, online abuse and harassment.

They led a day of charged testimony Tuesday that included the judge scolding the bombastic Jones for not being truthful with some of what he said under oath.

In a gripping exchange, Lewis spoke directly to Jones, who was sitting about 10 feet away. Earlier that day, Jones was on his broadcast program telling his audience that Heslin is “slow” and being manipulated by bad people.

“I am a mother first and foremost and I know you are a father. My son existed,” Lewis said to Jones. “I am not deep state … I know you know that … And yet you’re going to leave this courthouse and say it again on your show.”

At one point, Lewis asked Jones: “Do you think I’m an actor?”

“No, I don’t think you’re an actor,” Jones responded before the judge admonished him to be quiet until called to testify.

Heslin and Lewis are among several Sandy Hook families who have filed several lawsuits alleging that the Sandy Hook hoax claims pushed by Jones have led to years of abuse by him and his followers.

Heslin and Lewis both said they fear for their lives and have been confronted by strangers at home and on the street. Heslin said his home and car had been shot at. The jury heard a death threat sent via telephone message to another Sandy Hook family.

“I can’t even describe the last nine and a half years, the living hell that I and others have had to endure because of the recklessness and negligence of Alex Jones,” Heslin said.

Scarlett Lewis also described threatening emails that seemed to have uncovered deep details of her personal life.

“It’s fear for your life,” Scarlett Lewis said. “You don’t know what they were going to do.”

Heslin said he didn’t know if the Sandy Hook hoax conspiracy theory originated with Jones, but it was Jones who “lit the match and started the fire” with an online platform and broadcast that reached millions worldwide.

“What was said about me and Sandy Hook itself resonates around the world,” Heslin said. “As time went on, I truly realized how dangerous it was.”

Jones skipped Heslin’s Tuesday morning testimony while he was on his show — a move Heslin dismissed as “cowardly” — but arrived in the courtroom for part of Scarlett Lewis’ testimony. He was accompanied by several private security guards.

“Today is very important to me and it’s been a long time coming… to face Alex Jones for what he said and did to me. To restore the honor and legacy of my son,” Heslin said when Jones wasn’t there.

Heslin told the jury about holding his son with a bullet hole through his head, even describing the extent of the damage to his son’s body. A key segment of the case is a 2017 Infowars broadcast that said Heslin did not hold his son.

The jury was shown a school picture of a smiling Jesse taken two weeks before he was killed. The parents didn’t receive the photo until after the shooting. They described how Jesse was known for telling classmates to “run!” which likely saved lives.

An apology from Jones wouldn’t be good enough, the parents said.

“Alex started this fight,” Heslin said, “and I’ll finish this fight.”

Jones later took the stand and was initially combative with the judge, who had asked him to answer his own attorney’s question. Jones testified he had long wanted to apologize to the plaintiffs.

Later, the judge sent the jury out of the room and strongly scolded Jones for telling the jury he had complied with pretrial evidence gathering even though he didn’t and that he is bankrupt, which has not been determined. The plaintiffs’ attorneys were furious about Jones mentioning he is bankrupt, which they worry will taint the jury’s decisions about damages.

“This is not your show,” Judge Maya Guerra Gamble told Jones. “Your beliefs do not make something true. You are under oath.”

Last September, the judge admonished Jones in her default judgment over his failure to turn over documents requested by the Sandy Hook families. A court in Connecticut issued a similar default judgment against Jones for the same reasons in a separate lawsuit brought by other Sandy Hook parents.

At stake in the trial is how much Jones will pay. The parents have asked the jury to award $150 million in compensation for defamation and intentional infliction of emotional distress. The jury will then consider whether Jones and his company will pay punitive damages.

Jones has already tried to protect Free Speech Systems financially. The company filed for federal bankruptcy protection last week. Sandy Hook families have separately sued Jones over his financial claims from him, arguing that the company is trying to protect millions owned by Jones and his family from him through shell entities.

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Associated Press writer Paul J. Weber contributed to this report.

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For more of the AP’s coverage of school shootings: https://apnews.com/hub/school-shootings

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Business

Wild weather strikes Diggers and Dealers

Wild weather strikes Diggers and Dealers

Australia’s biggest mining industry event is in turmoil as wild weather rips through Perth and Kalgoorlie.

The glittering dinner on Wednesday, usually the pinnacle of the decades-old event, has been canceled as food and catering staff are stuck in Perth.

The big top is being emptied of industry booths as winds threaten safety in the huge marquee.

Instead, a cocktail party will cap off the event, organizers told AAP.

Hundreds of mining executives had already been stranded by grounded aircraft, unable to reach Kalgoorlie, including Fortescue Metals Group CEO Elizabeth Gaines who had to deliver her speech virtually on Tuesday.

Organizers said they had to close the main marquee to delegates as damaging wind gusts in excess of 90km/h are expected during the day.

“Due to the severe wind warning we are unable to bring the catering charter flight to Kalgoorlie that brings additional work force and supplies to deliver the WesTrac Gala Dinner,” a spokeswoman said.

“We will arrange an enjoyable evening and presentation of the traditional forum awards.”

All attendees will be hosted at the Goldfields Arts Center for the final day.

“Is Diggers and Dealers the latest victim of climate change,” a delegate asked.

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Business

Cost of Living crisis: WA wholesaler New West Foods warns of ‘perfect storm’ with food, pub prices set to rise

Cost of Living crisis: WA wholesaler New West Foods warns of 'perfect storm' with food, pub prices set to rise

WA’s biggest independent food distributor has warned consumers to expect further hikes at their favorite pubs and restaurants – and eventually supermarkets – as supply chain pressures and skyrocketing input costs continue to drive up prices.

The price of vegetable oil supplied by New West Foods to hundreds of eateries across WA has almost doubled since August 2020, with eggs up 75 per cent over the same two-year period.

Salmon has jumped 50 per cent while cheese and bacon are both up around 35 per cent.

Even the humble frozen chip – a staple of takeaway menus everywhere – has climbed 25 per cent.

The scale of price rises over the past two years.
Camera IconThe scale of price rises over the past two years. Credit: The West Australian

The majority of those price rises have come in the last 12 months as myriad factors combined to create what New West Foods managing director Damon Venoutsos said was the “perfect storm” for food costs.

Mr Venoutsos described distribution businesses like his own as the “canary in the coal mine” for price increases because – unlike supermarkets and fast-food chains – they did not enter into long-term agreements with suppliers.

“Most of the time we get 30 days’ notice from our suppliers that prices are going up whereas your big retailers (such as Coles and Woolworths) and quick service restaurants (such as KFC) can lock in their prices for anything up to six months ,” he said.

“Often we’re using the exact same supplier so while I don’t know when (the supermarkets) are going to catch up, it’s inevitable they will have to.”

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