Friday Financial Five: November 28th, 2014
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Friday, November 28, 2014
Dan Forbes, GoLocalWorcester MINDSETTER™
Recent data releases slightly negative
It’s a busy time for the economic calendar, with some slightly negative indications looking forward. GDP for the third quarter will be revised upward to 3.9, but the fourth quarter isn’t expected to be as strong. Consumer confidence took an unexpected dip, dropping from 94.1 to 88.7 based on a less than optimistic employment outlook. Initial filings for unemployment benefits topped 300,000 for the first time in over 2 months, but that may also be a result of the holidays approaching. For those interested in the scheduled release of economic data, Bloomberg provides a
helpful calendar.
Possible tax deal in the works
Congress is discussing an extensive tax deal to address many expiring provisions for individuals and businesses. Business owners would again be able to write off certain expenses and research credits would become a permanent part of the code. The deal, as currently constructed, doesn't’t address the Earned Income Credit and the child tax credit, which both expire at the end of 2017. According to the IRS commissioner, an agreement will have to be in place soon for tax refunds to be processed in a timely manner next year.
GAO offers guidance on multimillion dollar IRAs
Large IRA accounts are very much on the government’s radar, the thought being the IRS never intended for huge sums of money to be sheltered from taxation. The Government Accountability Office presented guidance to the IRS on ways to crack down, including a limit on the amount that can be accumulated and still receive preferential tax treatment. The report, using 2011 numbers, estimates roughly nine thousand IRA holders with assets above $5 million and a thousand people with $10 million or more. The large majority of people with IRAs, over 42 million, have $1 million or less in their account.
Continued strength in the rental market
The Wall Street Journal released details on the state of the rental market, which has exceeded the recovery of single family home construction. The building of multi-family housing with five or more units is at the strongest 12 month pace since 1989. An amazing 93 percent of multi-unit new construction is being built as rental units. Meanwhile, the building of single family homes is keeping pace or nominally higher than last year.
HUD issues new reverse mortgage details
Effective March 15, 2015, there will be further changes to the Home Equity Conversion Mortgage, or reverse mortgage. Housing and Urban Development (HUD), which oversees the program, continues to tinker with the financial assessment requirements at it tries to get a grasp on the proper way to underwrite this type of loan. Despite changes implemented in the beginning of 2014, it’s apparent that HUD is still paying more in claims than anticipated. The new financial assessment process may mean the mortgage company sets aside a higher portion of the loan for property taxes and insurance.
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.
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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.
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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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