Friday Financial Five – April 3, 2015
Friday, April 03, 2015
Dan Forbes, GoLocalProv MINDSETTER™
Retirement plan tax deadlines approach
Tax payers have less than two weeks to make the appropriate contributions to IRA accounts in an effort to save some tax dollars and help their retirement picture. Traditional and Roth IRAs must be created and funded by April 15th for the 2014 tax year. Both allow $5,500 contributions for those that qualify, with an extra $1,000 possible for those 50 and over. A SEP IRA can be established and funded by the employer’s tax filing dates, including extensions and allows for a contribution up to $53,000. Qualified plans and SIMPLE IRAs need to have been created in 2014 to qualify for funding in that tax year.
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April is a big month for tax prosecutions
Bloomberg cites a TRAC Research Center study out of Syracuse which details the increase in tax prosecutions that take place in April. This is no coincidence, as the IRS would like to influence those filing returns that are not entirely accurate. The number one classification of IRS criminal charges filed is “fraud and false statements." Getting audited is still improbable, as less than two percent of Americans get audited and most are in the higher income category. However, the government would like to use this month to remind taxpayers of their “responsibility under tax law”.
The most financially literate states
Everyone loves lists, and Wallethub is great at creating metrics that allow us to compare different areas of the country. Their latest analysis examines financial literacy in a country that’s racked up more than $133 billion in credit card debt in the last few years. The analysts divide literacy into two groups: Knowledge/Education and Planning/Daily Habits. The runaway winner for financial literacy was New Hampshire, while Massachusetts was very strong in third place. Rhode Island placed weakly in thirty-ninth, while Nevada and Mississippi occupy the bottom two slots of the chart.
Obamacare takes a hit in New York
For states that created exchanges instead of using healthcare.gov, there has always been a question about how the program gets funded once the federal grant money runs out. New York provided a not so promising precedent, as the legislature voted down a proposal to tax health policies to fund the state exchange. According to the legislature, the added tax drives the premiums up to a point that defeats the purpose of having the exchange in the first place. This may prove problematic for other state exchanges looking for ways to generate revenue in the face of state legislatures looking to reduce spending.
Colleges claiming to cover demonstrated financial need
Decision time approaches for those entering college in the fall. The qualitative factors of the different schools are important, but the final choice may simply come down to money and the perceived “bang for the buck." A list compiled by Lynn O’Shaughnessey from the College Board’s Common Data Set presents all 63 universities that claim they meet 100 percent of students’ need. These are many of the top universities in the country. Those that have received the financial package from one of these top schools may not necessarily feel like they’re meeting each family’s financial need, but according to this list and the school’s data, they are.
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: RI Business Rankings in US
See how Rhode Island stacked up.
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WalletHub
Rhode Island has 2015's eighth highest insurance premium penalties for high risk drivers, according to a WalletHub report.
Rhode Island ranks fifth overall in the category of speeding over 20 mph annual premium increase at $482. While ranking third overall in the category of 2 accidents annual premium increase at $2,721.
Rhode Island ranks ninth overall under the reckless driving annual premium increase at $749.
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WalletHub
Rhode Island has been ranked as the 8th most eco-friendly state in the country, according to a recent study by WalletHub.
Rhode Island ranks third in environmental quality and 16th in Eco-Friendly Behaviors Ran landing them in 8th overall.
RI is behind Washington and New Hampshire who are in the six and seven spots respectively, and in front of Connecticut and Hawaii who come in at the nine and ten spot.
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WalletHub
Rhode Island is 2015's 4th Worst State to be a taxpayer, according to a recent WalletHub report.
Rhode Island ranks 48th of 51 with an average state and local tax price of $7,159 which is good for a 27% difference from the national average.
The states that are directly behind Rhode Island are Wisconsin at $7,159, Nebraska at $7,298 and Illinois at $7,719 for a 37% difference from the national average.
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WalletHub
Rhode Island has the highest vehicle property taxes in the country, paying an average of $1,133 according to a report from WalletHub.
Virginia and Kansas are the two states just ahead of Rhode Island in the 49 and 50 spots, paying $962 and $905 respectively.
RI also ranks 42nd in average real estate tax, paying an average of $2,779, according to the WalletHub report.
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Gallup
Providence-metro ranks at the bottom for job creation in 2014
Rhode Island has been ranked amongst the worst in job creation, according to a recent survey done by Gallup.
Gallup gives the Prov-metro area an index score of 23, the lowest score is the New York- New Jersey area with 20.
Salt Lake City, Utah and Austin-round Rock, Texas rank the highest with a score of 37.
See the rest of the rankings here.
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Forbes
The 2014 state rankings by Forbes has just been released and Rhode Island moved up two spots from #48 in 2013 to #46 in 2014.
What does Forbes say about RI's business environment"
After Michigan and Illinois, Rhode Island has experienced the third worst net migration out of its state in the country over the past five years. With a recent unemployment rate of 7.6%—lower than only Georgia and Mississippi—residents are leaving the state in search of jobs. Rhode Island has been stuck in the bottom five overall for six straight years. One plus: labor costs are 5% below the national average, which stands out in the expensive Northeast.
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Tax Foundation
Findings from The State Business Tax Climate Index were released this morning by Tax Foundation which found Rhode Island to have the 45th best tax climate for businesses for 2015. The state's rank has not changed since last year after The Index analyzed 100 different tax variables in multiple categories.
Read more about the report here
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Thumbtack/Kauffman
Providence is the second worst city in America for small business, according to a new survey conducted by Thumbtack.com and the Kauffman Foundation.
More than 12,000 small businesses in 82 cities across the country participate in the survey. Providence received an overall "F" grade for small business friendliness.
Full Survey Results Here.
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The Economist
Small Business Friendliness Grade: F
The Economist grades states on an A+ to F grading scale for its small business climate. Rhode Island is one of just 6 states to earn an "F" grade.
Overbearing bureaucracy and excessive licensing is stifling small business in America.
Read More About The Economist Grade Here
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Forbes
Forbes ranks each state in business costs, economic climate, and growth prospects. RI is third worst in 2013.
The most damning in the commentary:
After Michigan, Rhode Island has experienced the second worst net migration in the country over the past five years.
Read More About Forbes Ranking Here
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Tax Foundation
#46 Tax Foundation
Tax Foundation ranks each state in corporate tax rank, sales tax rank, and unemployment insurance tax rank.
Rhode Island and the other states in the bottom ten suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.
Read More About Tax Foundation Ranking Here
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ALEC
#47 ALEC
ALEC ranks each state in economic performance and outlook.
Although Rhode Island 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
#50 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 Ranking Here
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Free Enterprise
#47 Free Enterprise
Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.
Rhode Island has continued to feel the direct impact and ripples from the recent recession—it ranks 47th overall in economic performance. However, positive rankings of 15th in talent pipeline and 16th in innovation and entrepreneurship suggest the existence of a foundation on which to build the future.
Read More About Free Enterprise Ranking Here
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Gallup
10th Worst in Gallup's Annual Ranking of State Job Markets 2014
Rhode Island has been ranked 10th worst for job creation in Gallup's annual ranking of state job markets in 2014 with a job creation index number of 21
Rhode Island is one of two (Connecticut) states to rank in the bottom ten each year since 2008.
The 2014 State level findings have were drawn from 201,254 interviews with employed adults across the nation.
See the full list of rankings here.
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