Friday Financial Five - August 14th, 2015

Friday, August 14, 2015

Dan Forbes, GoLocalPDX Contributor

Netflix offers a year of paid parental leave

Netflix, the streaming service threatening cable companies everywhere, has taken a bold stance on maternity and paternity leave for employees. Many of their employees will be eligible for a paid year of leave following the birth or adoption of a child. Much like the company that received huge publicity for raising their minimum wage to $70,000, the announcement began a national conversation about leave being mandated or a company perk. Many developed countries allow an extended period of time for parents to spend with children while still retaining employment.

No COLA expected for 2016 Social Security payments

Social Security recipients may get another unwelcome lack of pay raise for 2016, according to Mary Beth Franklin in Investment News. While the official announcement will come in October, the metric tied to any increase in benefits, the Consumer Price Index for urban wage earners (CPI-W), has actually declined in the first two quarters of 2015. As Franklin points out, many higher income retirees may face higher Medicare premiums in 2016, meaning they’ll have a net decrease in total retirement income.

Department of Labor hearing arguments about fiduciary standard

It’s interesting to see a snapshot of who falls on what side of the DOL’s proposed fiduciary rule. Proponents, such as the Financial Planning Coalition, want the rule implemented immediately to provide consumer protection. The Financial Services Roundtable says the rule is too complex and would adversely affect lower income households. Some companies, such as Metlife, contend the rule will eliminate their ability to work with clients. Met would have to choose between providing advice or creating, but wouldn’t feel comfortable doing both under a fiduciary standard.

Passing on IRAs with taxes in mind

Retirees with both a traditional IRA and a Roth IRA must prioritize which account to withdraw from. Those lucky enough to anticipate leaving some of this IRA money to heirs have taxes to consider. The conventional wisdom has been that bequeathing a Roth IRA is preferable to the traditional IRA, as beneficiaries can take tax free withdrawals from the Roth over their lifetimes. A strategy emerging is to focus on the person with the lowest tax rate paying the taxes on these distributions. For example, a parent with a higher tax bracket than his or her children would spend down the Roth first and leave the taxable IRA distributions subject to the children’s lower bracket. Prioritizing distributions this way may lead to more overall dollars between the two parties.

Student debt growth is slowed

In a sign that people may be getting wiser in the college decision process, a Federal Reserve Bank of New York report shows that the expansion of student loan debt is slowing. Between the second quarter of 2014 and the second quarter of 2015, outstanding student loan debt grew by $70 billion. That compares to $124 billion for the same time frame between 2013 and 2014. The reduction may be attributable to an improving economy or lower enrollment to for-profit institutions, which are more heavily dependent on student’s borrowing to cover tuition.

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: Slideshow: Oregon Receives Average Ranking for Business Climate

The state of Oregon is neither the best nor worst state to run a company, according to data pulled from nationwide business publications and testimonies from Oregon business owners.

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Thumbtack/Kauffman

Oregon receives a C+ grade for its overall friendliness to small businesses, according to a new survey conducted by Thumbtack.com and the Kauffman Foundation.

The study, drawing upon over 12,000 pieces of data, provides new insights about the nation’s business climate using a state by state approach. Click here to read the full article.

Photo Credit: GoLocalProv.com

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CNBC

Top States for Business 2014

Oregon Ranking: 22

The survey notes Oregon’s “idyllic quality of life [and] healthy economy” but also its “struggling education system and high cost of living.” Read more here.

By Jim.henderson (Own work) [CC0], via Wikimedia Commons

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Forbes

Best States for Business and Careers

Oregon Ranking: 19

Over the past 5 years, Oregon's economy has grown steadily, up 2.8% annually, which is the second best growth in the U.S. The state’s outlook is just as strong, with a forecasted 3.2% expansion per year. Read more here.

Photo Credit: Jim Larrison via Compfight cc

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Chief Executive

Best States for Doing Business

Oregon Ranking: 38

Notable Quote: “Oregon is going to kill the small business owner’s incentives to remain in the state if the 13.6% maximum state income tax passes in November of 2014. Many of the successful small business owners will relocate to Washington state (0% income tax) or other states.” Read more here.

Photo Credit: GoLocalProv.com

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Tax Foundation

Tax Climate

Oregon Ranking: 12

High income and corporate tax rates are balanced out by low sales and property tax figures, putting Oregon in the #12 spot according to the Tax Foundation’s State Business Tax Climate Index system.

"The Tax Foundation’s 2014 edition of the State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare." Read more here.

Photo Credit: GoLocalProv.com

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WalletHub

Best States to be a Taxpayer

WalletHub analyzed how state and local tax rates compare to the national median in all 50 years. . Eight different types of taxation were compared to determine the following:

"1) Which states have the highest and lowest tax rates; 2) how those rates compare to the national median; 3) which states offer the best tax rates when adjusted by the cost-of-living index."

Oregon Rank: 40

0% sales tax and the nation’s lowest alcohol tax are overcome by high income and gasoline taxes. Read more here.

Photo Credit: GoLocalProv.com

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ALEC

Economic Outlook for 2014

Oregon Ranking: 42

The 2014 economic outlook ranking helps determine how each state can expect to perform economically based on 15 policy areas that are proven determinants of economic success. Read more here.

Photo Credit: GoLocalProv.com

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US Chamber of Commerce Fo

This report goes state by state, addressing individual topics like Business Climate, Innovation and Entrepreneurship, Infrastructure, and Talent Pipeline.

Oregon receives an above average ranking, including a top-spot ranking in Productivity Growth, which indicates a state's shift toward higher-value jobs and industries. Read more here.

Photo Credit: GoLocalProv.com

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PEW Charitable Trusts

Oregon is among ten states to have the highest growth rates, according to Moody’s analytics.

Fast Job Growth Outlook Ranking: 7th

Job outlook is particularly strong out West, including Oregon. Categories like steady home construction, increasing levels of investment in high tech and the aerospace industry, and trade with Asia all are strong contributors to the positive forecast. Read more here.

Photo Credit: GoLocalProv.com