Friday Financial Five – November 6, 2015

Friday, November 06, 2015

Daniel P. Forbes GoLocalProv MINDSETTER™

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Budget deal still a work in progress

Getting a budget deal done before December is a major step for a usually punchless Congress, but it still isn’t finalized. The basic framework agreed to last week would help shore up the Social Security disability insurance program, which has been damaged by fraud and waste over the years. Facing a severe benefit cut, the agreed upon changes would increase how much is paid into the disability fund through payroll deductions. Medicare premium increases would also be curbed. However, there is some disagreement about the decrease in defense spending. Republicans would also like to eliminate federal spending on state health care exchanges and reduce some regulatory authority granted by Dodd-Frank. While it appeared Congress had reached agreement well ahead of schedule, it may be another case of a mid-December resolution.

Salesforce addresses gender pay inequality

Reports differ on the disparity between pay for the genders, but women are generally considered to be receiving 80 percent of men’s pay for similar work. Like the minimum wage, gender pay inequality has long been talked about but mostly met with inaction. In what is considered a major step forward, Salesforce, with more than three quarters of their 17,000 employees being male, adjusted salaries for their female employees against male counterparts. It’s considered the first occurrence of a large private company publicly addressing income differences.

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Forbes ranks business climate in each state

For states to have an effective business climate, it’s imperative that workers are able to find desirable jobs and experience wage growth. The top of Forbes’ (http://www.forbes.com/best-states-for-business/) 2015 list of best business climates benefit from low entry costs and an absence of regulatory hurdles. Utah and Virginia again head the list, with Massachusetts ranking 18th despite coming in dead last in business costs and Rhode Island coming in 46th thanks to a low ranking in regulatory environment. Some interesting metrics added to this year’s rankings: commute times, prevalence of business litigation, and the state’s fiscal health, a factor that undoubtedly didn’t help Illinois’ ranking.

3rd Quarter GDP positive

Following a strong second quarter, Gross Domestic Product for the country met expectations with 1.5% annualized growth in the third quarter. Positive GDP numbers are always nice, but it’s still a far cry from an ideal economic output. The Commerce Department noted a drop in private investment, government spending, and a decrease in inventories. As with every quarter, the possibility of a revision exists as more details come in, but the perception of continued economic strength seems to have given Fed members confidence to finally hike rates in December.

Divorce and tax considerations

Divorce and taxes are two topics most people would rather not think about. Those going through the divorce process or newly divorced need to avoid certain tax pitfalls. “Payers” or “payees” of child support and spousal support may need guidance on deducting these amounts on a tax return. Generally speaking, child-support is non-taxable income to the person receiving it and not tax deductible for the person paying it. Conversely, spousal support is taxable to the person receiving it and tax deductible to the payer. If these payments are not structured properly in a divorce agreement, there are many ways the IRS can audit, re-classify these payments, and charge penalties and interest. Other topics of concern include the claiming of children for the tax credits and deduction of divorce related fees. The divorce process can be painful enough, so it helps not to compound it by absorbing unnecessary taxes and fees.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. 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.

Friday Financial Five – November 6, 2015

Salesforce addresses gender pay inequality

Forbes ranks business climate in each state

3rd Quarter GDP positive

Divorce and tax considerations

Related Slideshow: RI Business Rankings in US

WalletHub

WalletHub

WalletHub

WalletHub

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Gallup

Forbes

Tax Foundation

WalletHub

Thumbtack/Kauffman

The Economist

CNBC

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ChiefExecutive.net

Tax Foundation

Wallet Hub

ALEC

Kauffman Foundation

Free Enterprise

The Pew Charitable Trusts

Gallup

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