Friday Financial Five – April 17, 2015

Friday, April 17, 2015

Dan Forbes, GoLocalWorcester MINDSETTER™

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A good year for the government

Those celebrating tax week can rejoice that the federal government has taken in roughly $1.5 trillion dollars since October 2014, making fiscal year 2015 the biggest in government history. According to the Bureau of Fiscal Service, a division of the U.S. Treasury, the majority of those revenues come from income withheld and employment taxes. The next largest source of revenue is income taxes from corporations. The lowest revenue source is comprised of estate and gift taxes, an area that some Republican members of Congress are looking to eliminate completely.

Shift for housing affordability

It appears the housing pendulum has indeed swung the other way. According to RealtyTrac, purchasing a house is more affordable than renting in over 75 percent of the country. The analysis considers median priced homes in 461 counties nationwide, all with a population of at least 100,000. In 351 of those counties, payments on a home were lower than renting for the first quarter of this year. Wage and down payment considerations factor into the equation, but it appears those paying rental dollars should look long and hard at home ownership.

Department of Labor unveils new fiduciary plan

The DOL released the plans allowing a fiduciary standard for advisors working on retirement plans. The new proposal contains exemptions that will allow advisors to get paid via commissions and 12b-1 fees but also includes a “best interest contract exemption” that requires advisors to commit to putting clients’ best interests first. Under the proposal, the IRS would be able to impose an excise tax for transactions based on conflicted advice.

CFP Board releases a study on financial stress

A majority of people are suffering financial stress of one form or another, according to the CFP Board’s recent survey. The top three stresses stemmed from debt, daily budgeting, and health costs. Only fourteen percent of the thousand people surveyed reported no stress relating to financial issues. Interestingly, women were more stressed than men, and those younger than 45 were more stressed than those 45 and older.

Means testing for Social Security pushed by Christie

Presidential candidates are trying to bring distinguishing ideas to the table, as Governor Chris Christie discussed changes to Social Security involving means testing and a higher retirement age. Those making over $200,000 in other income would be ineligible for Social Security benefits, while the normal retirement age would increase from 67 to 69 for those born in 1960 or later. Medicare eligibility would incrementally rise from the current age of 65 to age 67. According to campaign projections, this would save $1 trillion over a decade.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].

Related Slideshow: Massachusetts Business Rankings

See how Massachusetts stacked up.

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WalletHub

Massachusetts has 2015's 28th highest insurance premium penalties for high risk drivers, according to a WalletHub report.

Mass is behind Colorado and New Mexico who come in at 26 and 27 spots respectively while Mass is ahead of Tennessee and the District of Columbia who rank 29 and 30 respectively.

Massachusetts ranks 14th overall in the category of DUI conviction annual premium increase with an amount of $756.

Massachusetts ranks 20th overall in the category of speeding over 20 mph annual premium increase with a total of $261 while ranking 21 overall in the category of two accidents annual premium increase with a total of $1,364.

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WalletHub

Massachusetts has been ranked as the 5th most eco-friendly state in the country, according to a recent study by WalletHub.

Mass ranks tenth in environmental quality and fourth in Eco-Friendly Behaviors landing them in 8th overall.

Mass is behind Minnesota and New York who are in the fourth and third spots respectively, and in front of Washington and New Hampshire who come in at the six and seven spots.

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The Economist

Small Business Friendliness Grade: D+

The Economist grades states on an A+ to F grading scale for its small business climate. Massachusetts ranks near the bottom of the nation, joining New Mexico and New York in receiving D+ grades. 9 states scored worse than a D+ in the Economist rankings.

Overbearing bureaucracy and excessive licensing is stifling small business in America.

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CNBC

#25 CNBC

CNBC ranks each state in cost of doing business, economy, technology and innovation.

Massachusetts' unemployment rate as of May 2014 was 5.6 percent. The state added 9,100 jobs in the month of May.

Forbes

#13 Forbes

Forbes ranks each state in business costs, economic climate, and growth prospects.

The most damning in the commentary:

Massachusetts’ business costs, including labor, energy and taxes, are the highest of the 48 contiguous states—only Hawaii is higher—at 20% above the national average.

ChiefExecutive.net

#47 ChiefExecutive.net

ChiefExecutive.net ranks each state in taxations and regulations, workforce quality, and living environment.

The most damning in the commentary:

Taxation and regulation are always the key barometers. Massachusetts and Oregon are the worst.

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Tax Foundation

#25 Tax Foundation

Tax Foundation ranks each state in corporate tax rank, sales tax rank, and unemployment insurance tax rank.

Massachusetts ranked #49 in unemployment insurance tax.

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Wallet Hub

#10 Wallet Hub

Wallet Hub ranks each state in ROI rank, state tax rank, and overall government services.

Massachusetts ranked #49 in worst roads and bridges, but ranked #7 in overall government services.

ALEC

#41 ALEC

ALEC ranks each state in economic performance and outlook.

Although Massachusetts ranked low in economic performance, a forward-looking forecast is based on the state’s standing in 15 important state policy variables. Some of these variables include top marginal personal income tax rate and sales tax burden.

Kauffman Foundation

#29 Kauffman Foundation

Kauffman Foundation ranks each state in entrepreneurship.

Entrepreneurial activity generally is highest in Western and Southern states
and lowest in Midwestern and Northeastern states.

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Free Enterprise

#18 Free Enterprise

Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.

Massachusetts's reputation as a hotspot for science and technology endures in this year's rankings. The commonwealth is a center for STEM jobs and university research and development, ranking 4th and 2nd, respectively, in those two categories. It also ranks 6th as a center for high-tech establishments. Massachusetts is taking aggressive steps to bolster economic activity with high-impact university-industry R&D projects and new tools for tech-based startup companies.