Friday Financial Five – February 26, 2016

Friday, February 26, 2016

Dan Forbes, GoLocalWorcester Contributor

Trump tax plan

It’s time to revisit Donald Trump’s tax reform platform as he remains the frontrunner to be the Republican nominee. Single people making less than $25,000 and couples making less than $50,000 would owe no federal income tax. There would be four tax brackets with a high rate of 25 percent and corporate taxes would have a maximum tax rate of 15 percent. The Trump plan would also eliminate the estate tax. While Team Trump believes the plan is revenue neutral, the Tax Foundation projects a $12 trillion reduction in tax revenue over ten years and a roughly $10 trillion increase in the government deficit.

IRS releases “Dirty Dozen” tax scams for 2016

The IRS released its yearly list of scams for the public to be mindful of this tax season. Included in this year’s list are fake charities, the hiding of income in offshore accounts, and the possibility of a fraudulent tax preparer. That tax preparer scam can often be avoided by requesting the preparer’s Preparer Tax Identification Number (PTIN). The IRS also warns against padding deductions, inflating a refund claim, or trying to take excessive business credits.

Social Security addresses identity theft

Included in the “Dirty Dozen” list of tax scams released by the IRS is identity theft. Tax time is an opportune occassion for thieves to target Social Security numbers in an attempt to file fraudulent returns. The Social Security administration issued a publication to address this issue. It’s also a good idea to check your record with the department at least once a year to make sure they have earnings information correct.

IRA details to keep in mind

Morningstar has compiled a great list of 20 considerations for the use of IRAs. Many one income households don’t realize it’s possible to fund an IRA for a non-working spouse. It may also make sense to gift money into a Roth IRA for children that have earned income. Those with the available funds can contribute as early as possible instead of waiting until the last minute. The article also encourages IRA holders to reconsider doubling up on tax shelters.

Financial hot buttons for couples

Arguments within a marriage often center around finances. According to a Google Consumer Survey taken across the country, the top financial deal breakers for couples include a spouse not earning enough, overspending, poor credit, and a spouse being secretive about finances. Other problems involve the husband or wife being too cheap or the couple carrying too much debt. Over half of all respondents in all states said that overspending would be their biggest deal breaker, followed closely by being secretive about their finances. Answers amongst participants across the board were varied according to the cost of living and transportation, tax rates, divorce rates and the average credit card balances of the area they lived in.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. 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.