Friday Financial Five—April 5th, 2013
Friday, April 05, 2013
Internet sales tax is on the way
The idea of a sales tax on items purchased over the internet has been floated around for years. Brick and mortar retailers claim it’s unfair that a buyer can test out an item in a store and then head home to buy it online without paying a sales tax. Like Rhode Island, states are looking for ways to generate revenue, so the Marketplace Fairness Act of 2013 has been picking up steam, passing in the Senate as an amendment. While no one expects the current iteration to make it into law, it’s a reasonable assumption that Amazon or EBay will be collecting Rhode Island sales tax in the near future.
Banks still too big to fail
It’s bad news that the big banks are again engaging in activity similar to what led to 2008’s financial calamity. Three mega-banks (Bank of America, Citigroup, and J.P. Morgan Chase) all had huge returns in 2012, but have lagged the financial sector since 2000 in terms of stock performance, return on equity and revenue growth, according to bank analyst Mike Mayo. Their size makes them extremely difficult to regulate, and the institutions might have even greater value if broken up into pieces. More needs to be done to encourage this, as it’s a win-win to the shareholders if stock prices increase while reducing the threat of another 2008.
Buy/Sell agreements for business owners
Small business partners need to take a step back and ask the question: What happens if one of us dies before leaving the business? Rhode Island has numerous small businesses, many of them family owned. If the spouse of a business owner is ill-equipped to fill the owner’s shoes, what’s to be done with the stock rights he or she might inherit? Enter the buy-sell agreement. It’s an arrangement where owners put a value on their company and specify a price for one partner to buy out the other partner’s heirs. Assuming that family members will be able to harmoniously work out post-death details is not the way to go.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTApril is Financial Literacy Month
January is the month that people commit to improving their physical selves by joining a gym. In April, we have Financial Literacy Month, and the focus is identifying fiscal health and then taking measures to improve. This includes looking at income, expenses, and credit, while also setting attainable goals. Head to this website for “30 Steps to Financial Wellness”: http://www.financialliteracymonth.com/30Steps/
RI health insurance developments
There was recent news that health insurance exchanges for small businesses would be delayed for one year, but Rhode Island should not be affected. The delay pertains only to those states participating in the federal exchange. Rhode Island is one of the 16 states in the process of building its own.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].
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