Friday Financial Five – June 27, 2014

Friday, June 27, 2014

Dan Forbes, GoLocalProv MINDSETTER™

 

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CNBC ranks top states for business

For the eighth year, CNBC has compiled a list of the most business friendly states. For 2014, the top state is Georgia, which scored in the top three for economy, infrastructure and workforce. Texas came in a number two, topping the list in economy and infrastructure. Rhode Island, struggling as it has in several national rankings, finished in last place. The state is hampered by a high cost of doing business, a struggling economy, and poor infrastructure. Six of the ten best states for education finished 40th or lower, indicating states are educating workers but are unable to retain their employment.

Health care providers not budging on transparency

The push for consumers to take more responsibility for health care expenses is worthwhile. There is an abundance of information available in all other aspects of the purchasing process, so pulling back the veil on health costs wouldn’t seem to be a tremendous obstacle. There’s just one problem: the healthcare industry really doesn’t want the public to know how much treatment costs. Eventually, the pressure will be too much to deflect and a patient will look at a menu of treatments like a restaurant menu, but it’s going to take a while.

People still not saving enough

A group called Oxford Economics has released a paper, Another Penny Saved: The Economic Benefits of Higher US Savings which argues for increasing the national savings rate from the current 3.8 percent to between 5 and 9 percent. The group notes the 30 year declining savings rate, citing the Bureau of Economic Analysis, and 75 percent of U.S. households not having enough savings to cover six months of expenses. This rule of thumb for emergency savings is meant to bridge the gap for unexpected events such as a loss of job. While some argue increased savings will hurt GDP because consumers aren’t spending as much, increased emergency reserves may help GDP by insulating savers from economically harmful alternatives.

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SEC not hiring more regulators; IRS’ proposing a voluntary certification for tax preparers

There has been support for increased meaningful financial oversight, but that doesn’t mean everyone is embracing the concept. The SEC was denied funds to increase their number of regulators, a glaring need, by 250. Meanwhile, the AICPA, the American Institute of CPAs, has issued the IRS a strongly worded letter regarding the implementation of a voluntary tax preparer certification program. The AICPA argues this will “cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public, and lead to litigation.”

The mother of all tax avoidance is finally punished

Paul Daugerdas, an ex-attorney, was finally convicted in one of the biggest criminal tax frauds in history. In this “broad tax-shelter conspiracy” that lasted over a decade, he helped create phony tax shelters for a wide variety of wealthy individuals. Over 1,000 individuals participated in $7 billion of fraudulent tax deductions and over $1 billion in phony losses. Daugerdas’ 15 year prison sentence, however, will be very real.

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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