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Electric Cars Projected to Make Waves Through Oil and Other Global Industries

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Electric Cars Projected to Make Waves Through Oil and Other Global Industries

For over a decade, the electric car has been heralded as the most world-changing and upcoming technology.

The demand for electric cars has been rising steadily every year, and Elon Musk’s Tesla, the most prominent electric car manufacturer, plans to sell 500,000 cars each year by 2018.

For context, this projected growth is even higher than the rise of the Model T in the early 1900’s.

 

Why Are People Demanding Electric Cars?

Electric cars’ energy efficiency, economic value, and potential to reduce some of the automobile industry’s most egregious environmental impacts are very strong selling points. These qualities have led the U.S. government to incentive consumers to purchase electric cars, promising a $7,500 tax refund to anyone who purchases the upcoming Model 3, Tesla’s first mass-produced car.

Many industries have jumped onto the surge in demand and interest, with Chevrolet coming out this year with its mass-produced electric vehicle. Governments in Europe, such as Germany, are also using tax incentives to encourage industry growth. Governments are also beginning to plan for the massive infrastructural changes which will need to occur, such as building charging stations and increased electric grid power.

 

Economic Impact of the Rise of Electric Cars

There are clearly many positive economic impacts of electric cars for consumers. Owners of hybrid vehicles will spend less money on gas, and owners of fully electric vehicles will spend nothing.

The clear economic benefit of the huge tax break means more money in consumers’ pockets, and thus more circulating in the economy. With driving made cheaper and easier, more people will travel, stimulating the tourism economy in many parts of the U.S.

Asian economies such as Korea, Japan, and China have also benefited through the creation of many jobs producing batteries for upcoming electric cars.
Importantly, the use of electric cars strongly decreases the amount of biomass being burned to fuel transportation. This decline in carbon dioxide emitted into the atmosphere would have not only human and environmental benefits but also economic benefits.

By halting some of the environmental damage we are doing now, we save millions of dollars down the road which would be spent on medical bills from pulmonary problems caused by smog and adapting and trying to clean up a heavily polluted atmosphere.

However, many have debated whether electric vehicles are actually as energy-conserving as they claim to be, as it takes a lot of energy to produce the batteries, and they are not suitable for cities experiencing energy shortages.

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Negative Impacts
Despite the promises the electric car industry holds for a cheaper and cleaner transportation future, there are also some major economic consequences for producers heavily invested in the traditional automobile industry.

The most obvious example is oil. With the demand for oil declining as people switch to electric cars, oil producers will suffer from overproduction crises, massive price decreases, and potential total market crash. Recently, however, as oil prices have declined, fewer people have been interested in electric vehicles as an alternative.

Many oil-producing countries such as Saudi Arabia have positive relationships with the United States only because of the oil trade and are very politically tense. A crash of the oil market would destabilize many Middle Eastern countries and lead to potential political conflict.

However, as more cars are on the road, the oil industry will have to find alternative energy pathways forward regardless of whether electric vehicles rise to prominence.

 

Some Industries Which May Be Impacted

  • Battery producers
  • Electricity companies and power plants
  • Utilities management companies
  • Construction Industry (for development of charging infrastructure)
  • Aluminum, Nickel, and Platinum

 

Impact on the Platinum Industry

Oil is not the only industry which will experience difficulties as electric cars gain popularity.

Another key player is the platinum industry.

The automobile industry makes up nearly half of the total market for platinum because platinum is an important element in purifying air emitted from the exhaust pipes of cars.

Electric cars require no platinum to manufacture, so platinum producers would lose half of their demand if everyone switched to electric. However, this is not necessarily inevitable.

Car producers are also looking into the creation of hydrogen-cell powered cars, including Toyota, which released a hydrogen-cell vehicle in 2015. These cars use hydrogen as their primary fuel source, and hydrogen cells are already proven to be effective through their use in space rockets. Hydrogen-powered cars use a large amount of platinum in production, so this could stimulate the platinum market.

 

Impact on Battery Producers

Many investors are predicting that as oil declines as the most globally important market, the battery manufacturing industry will rise to take its place. Battery manufacturers will also have to adapt and change significantly from their current production models.

Instead of chemistry at the battery cell level, they will have to begin focusing on how their batteries will work as an aggregate system in the vehicle. Producers will have to work more closely with manufacturers of other automobile parts than every before.

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American Airlines Seeks $12B in Coronavirus Rescue Funding

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American Airlines seeks $12B in coronavirus rescue funding

American Airlines is seeking $12 billion in loans and grants from the U.S. government, and says it won’t furlough employees for the next six months during the coronavirus health crisis.

In a memo sent to employees from CEO Doug Parker and President Robert Isom, the U.S. carrier said it will seek the funding as part of the $50 billion pot set aside for airline industry bailouts that’s included with the $2.2 trillion economic relief bill passed by Congress and signed by President Donald Trump last week.

Parker and Isom said, with the government help, they’re confident American will “fly through even the worst of potential future scenarios.”

To receive the rescue funding, carriers must not furlough workers or cut their pay rates through Sept. 30. It allows for equity stakes for the federal government and requires carriers to maintain certain air routes.

American is the world’s largest airline by fleet size, passenger traffic and revenue passenger miles. It and other airlines are offering partially paid, voluntary leaves of absence to workers as traveler demand has evaporated due to the pandemic. Three out of every four Americans are presently subject to municipally ordered lockdowns.

Monday, American said it’s extending no-fee travel changes for flyers who bought fares through April 30.

Also Monday, low-cost carrier Spirit Airlines said it’s canceling all flights to and from New York, New Jersey and Connecticut after the Centers for Disease Control and Prevention warned against all non-essential travel in the region.

Spirit said it’s suspending service to New York City’s LaGuardia Airport, Newark, N.J., Hartford, Conn., and Plattsburgh, N.Y., through at least May 4.

Copyright 2020 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI’s prior written consent.

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Federal CARES Act Provides Relief to Businesses Hurt by COVID-19

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Federal CARES Act provides relief to businesses hurt by COVID-19

The federal Coronavirus Aid, Relief and Economic Security Act passed by both Congress and signed into law by President Trump, also known as the CARES Act, offers major financial support for companies impacted by the coronavirus pandemic.

The most vital policy provisions for businesses affected by the coronavirus, according to the U.S. Chamber of Commerce, are:

  • Slowing the payment of payroll taxes to allow businesses to have more cash to keep employees on their payrolls.
  • Loans and grants for small businesses.
  • Creating a bridge loan facility to allow businesses with significantly less or no available revenue to continue to pay employees.

The chamber has published an interactive map for businesses to learn how available aid under the Small Business Paycheck Protection Program can help small businesses in each state. The website lists the amount aid available in each state, the number of small businesses and small business employees. To access the interactive map, click here.

The National Retail Federation, meanwhile, has published a summary of the CARES Act’s key provisions.

  • The “Paycheck Protection Program” provides $S250 billion to support loans for employers with less than 500 employees.
  • The “Loan Program and Credit Facility” provides $500 billion in both direct and indirect lending in Federal Reserve credit.
  • The “Unemployment Insurance Provision” provides assistance for unemployed workers, including those who have exhausted regular state and feral unemployment compensation in addition to short-term compensation programs.
  • The “Business Tax Provisions” includes tax provisions for retailers to offset the cost of retaining employees during the economic downturn.

For the full National Retail Federation summary, click here.

“Securing these funds could make the difference between keeping a business up and running over the coming weeks or being forced to reduce salaries, lay off employees, or shutter businesses entirely,” Thomas Donohue, U.S. Chamber of Commerce CEO, said in a press release.

For the latest updates on how the coronavirus is affecting the kiosk industry, click here.

Copyright © 2020 Networld Media. All rights reserved.

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IRS, Treasury Department and Department of Labor Give Guidance on Small Business Leave and Tax Credit

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IRS, Treasury Department and Department of Labor give guidance on small business leave and tax credit

The U.S. Treasury Department, Internal Revenue Service (IRS) and the U.S. Department of Labor (Labor) have announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.

This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.

The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members.

The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.

Key Takeaways

* Paid Sick Leave for Workers

* For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.

* Complete Coverage

* Employers receive 100% reimbursement for paid leave pursuant to the Act.

* Health insurance costs are also included in the credit.

* Employers face no payroll tax liability.

* Self-employed individuals receive an equivalent credit.

* Fast Funds

* Reimbursement will be quick and easy to obtain.

* An immediate dollar-for-dollar tax offset against payroll taxes will be provided

* Where a refund is owed, the IRS will send the refund as quickly as possible.

* Small Business Protection

* Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened.

* Easing Compliance

* Requirements subject to 30-day non-enforcement period for good faith compliance efforts.

To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.

Background

The Act provided paid sick leave and expanded family and medical leave for COVID-19 related reasons and created the refundable paid sick leave credit and the paid child care leave credit for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and December 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances.

Paid Leave

The Act provides that employees of eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay where the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis. An employee who is unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed or child care provider is unavailable for reasons related to COVID-19, and/or the employee is experiencing substantially similar conditions as specified by the U.S. Department of Health and Human Services can receive two weeks (up to 80 hours) of paid sick leave at 2/3 the employee’s pay. An employee who is unable to work due to a need to care for a child whose school is closed, or child care provider is unavailable for reasons related to COVID-19, may in some instances receive up to an additional ten weeks of expanded paid family and medical leave at 2/3 the employee’s pay.

Paid Sick Leave Credit

For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days. For an employee who is caring for someone with Coronavirus, or is caring for a child because the child’s school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Child Care Leave Credit

In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Prompt Payment for the Cost of Providing Leave

When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.

Under guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.

The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.

If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.

Examples

If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Small Business Exemption

Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer’s business as a going concern. Labor will provide emergency guidance and rulemaking to clearly articulate this standard.

Non-Enforcement Period

Labor will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, Labor will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. Labor will instead focus on compliance assistance during the 30-day period.

For More Information

For more information about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov. Information regarding the process to receive an advance payment of the credit will be posted next week.

© Copyright 2020, The Courier, All Rights Reserved.

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