Friday Financial Five – February 13, 2015
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Friday, February 13, 2015
Dan Forbes, GoLocalWorcester MINDSETTER™
Federal budget by the numbers
The Treasury released
budget data for the first four months of the fiscal year and recent positive trends are facing a reversal. From October of last year through January 2015, the government took in over a trillion dollars in tax revenue, but the deficit increased over last year’s time period by six percent to $194 billion. There were increases to Medicaid spending in conjunction with the implementation of the new healthcare law, while defense spending fell over 4 percent.
Traditional pension to 401(k) more expensive?
The National Institute on Retirement Security (NERS) has analyzed the impact of shifting pension plans from defined benefit plans to defined contribution plans. According to the group’s study of three states (Alaska, West Virginia, and Michigan), there have been increased funding issues, costs, and debt incurred by changing from traditional pensions to a 401(k) style plan. This information may provide a different perspective for numerous other states considering a similar change.
Expatriates on the rise
Tax policy should factor into living decisions, especially for those that have options. CNBC cites a Treasury report indicating a record number of people gave up their American citizenship in 2014. While an increasing income tax policy is usually cited as the reason people leave a state or country, CNBC also cites FACTA (Foreign Account Tax Compliance Act) as a contributing factor. FACTA requires foreign banks to report Americans with $50,000 or more held outside of the country. With no citizenship, there’s no reporting requirement on those individuals.
Smaller banks getting harmed by regulations
Marshall Lux and Robert Greene of Harvard University have conducted a study about Dodd-Frank’s effects on the banking industry. Community banks are suffering an accelerated decline in share of total banking assets and commercial market lending. The report compares FDIC data before and after the implementation of the regulatory measures. Small bank assets have fallen to 20 percent of the total, down from 40 percent in 1994. If these trends continue, larger banks may swallow up community banks, leaving a hole for certain sectors that are primarily serviced by smaller institutions.
Revisiting Robin Williams’ estate
The conflict between Robin Williams’ beneficiaries proves legal disputes occur even when estate planning documents are in place. The heart of the dispute between Williams’ widow and three children from previous marriages is the division of contents. Specifically, Williams’ trust uses the term “memorabilia”, which may be open to different interpretations. When planning estates involving multiple marriages or a prenuptial agreement, it’s an added level of importance to be very specific when listing the recipient of valuable items or those with sentimental value.
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.
Read More About The Economist Grade Here
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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.
Read More About CNBC Ranking Here
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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.
Read More About Forbes Ranking Here
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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.
Read More About ChiefExecutive.net Ranking Here
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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.
Read More About Wallet Hub Ranking Here
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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.
Read More About ALEC Ranking Here
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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.
Read More About Kauffman Foundation Ranking Here
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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.
Read More About Free Enterprise Ranking Here
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