Friday Financial Five – May 8, 2015

Friday, May 08, 2015

Dan Forbes, GoLocalWorcester MINDSETTER™

America’s total taxation reaching new heights

There’s a tendency to focus on the record breaking income tax that was due April 15th, but that’s just a portion country’s tax liability according to the U.S. Congress’s Joint Committee on Taxation via Bloomberg. The committee’s report highlights the additional payroll taxes paid into Social Security and Medicare, a total of almost $1 trillion between employees and employers. The other area that generates a healthy return for the government is the excise tax, totaling almost $100 billion. This includes alcohol, cigarettes, and fuel.

How are consumers feeling?

While the Federal Reserve recently cited a continuation of high consumer confidence, consumers themselves may not be so sure. The weekly Bloomberg Consumer Confidence Index fell a whole point, decreasing from 44.7 to 43.7 out of 100. That touches the low level for roughly a year, with views of the economy hitting a three month low and the buying climate at its lowest in six weeks.

Big banks facing SEC investigation

Big banks have had their share of regulatory run-ins over the years, and now Bank of America and JPMorgan are both being investigated by the SEC for possible violations. Bank of America is being investigated to see if they violated customer-protection rules or misled regulators in relation to Merrill Lynch trading that occurred a few years ago. JPMorgan Chase & Co is being scrutinized about how the company sells mutual funds. The SEC wants to determine if the bank improperly directed clients to their own proprietary funds.

Better technology should mean lower long-term care costs

There is finally some good news as it pertains to long-term care. Advances in technology are expected to lead to a reduction in long term care costs, according to a recent report presented to the Senate. The technological advances, including sound-monitoring equipment and beds with sensors, will eventually allow seniors to stay in their homes longer without jeopardizing their health. The longer seniors can be kept out of full time nursing home care, the lower the overall cost of care. Reduced expenses would allow increased use of long term care insurance policies, which have been subjected to recent dramatic price increases.

The not-so minimum wage

The leader of Gravity Payments, Dan Price, was highlighted by the New York Times last month for gradually raising his company’s minimum wage. Over the next three years, everyone in his company will move to a baseline of $70,000, with the current average salary being $48,000. The decision has been applauded by worker friendly groups and met with skepticism by those questioning how a company will contend with dramatically increased baseline labor costs. Regardless of the outcome, the company has certainly raised its public profile.

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.

Prev Next

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.

Prev Next

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.

Prev Next

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.

Prev Next

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.

Prev Next

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.

Prev Next

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.

Prev Next

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.