Friday Financial Five – January 15, 2016
Friday, January 15, 2016
Economic unrest persists despite unemployment numbers that are expected to fall below five percent, representing nearly full employment. Apparently having jobs doesn’t mean all is well in the land of the working person. According to Wallethub, job vacancies were sparse in 2015 and raises are expected in 2016. They compared 150 cities based on several metrics within the overall job market and combined that with a socioeconomic score. The result is three cities in Texas (Plano, Austin, and Irving) placing in the top four of the list. Amarillo, Dallas, and Houston also placed in the top 25. For the northeast, Boston was tops coming in at number 49, while Providence finished near the bottom at 146.
Estate tax again a political football
The estate tax is an area constantly under the threat of change. Some would like to do away with it entirely. Others feel it needs to apply to more people and at a higher rate. Presidential nominee, Hillary Clinton, addressed the issue this week and belongs in the camp that the deceased need to pay more in taxes. Her plan would start taxing estates at $3.5 million, a nearly $2 million decrease from the current level. The tax rate would also increase from 40% to 45%.
Taxing college endowments
Ideas to tax individuals or businesses are common but it seems rare that tax exempt organizations come under the microscope. A Republican congressman, Tom Reed, is targeting college war chests by introducing legislation that would tax those with an endowment over $1 billion. The tax would be equal to 25 percent of the investment income on funds above that threshold. Revenue generated would reduce costs for low and middle income students and colleges that don’t comply in three years would lose tax-exempt status. The concept of “free college” may mean the expense is bore by the colleges themselves as opposed to taxpayers.
Divorce is cyclical and peaks in January
According to the American Academy of Matrimonial Lawyers, January is the month when divorce filings are one-third higher than other months of the year. The numbers are mainly attributed to individuals wanting to start over in the new year and couples getting through the holidays before untying the knot. Separating couples should gather important financial documents, evaluate assets and debts, develop a budget, determine future earnings potential, and estimate immediate needs. By preparing ahead of time, they can save themselves money and potential surprises once the decision has been made to move forward.
2016 Medicare and Obamacare considerations
Health costs in general are expected to bump this year, with a percentage of Medicare enrollees digesting a 15% increase in monthly premium for Part B. After years of Part D (Prescription Drug Plan) premiums remaining steady, drug costs are expected to rise faster in the near term than Parts A and B. As for Obamacare, the penalties for not adhering to the Affordable Care Act increase in 2016, with a flat assessment rising to $695 per individual with a maximum of $2,085 per household. The percentage-based assessment will go up to 2.5%.
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.
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.
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.
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.
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 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.
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.
#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.
The Pew Charitable Trusts
#45 The Pew Charitable Trusts
The Pew Charitable Trusts ranks each state in job growth and job creation.
Massachusetts added 38,368 jobs in 2014.
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