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Friday Financial Five – February 21st, 2014

Friday, February 21, 2014

 

Figuring out the new Medicare surtax

Reading tax code could put Dick Vitale to sleep during a Duke-North Carolina game. So it may make taxpayers slightly uneasy that some major new tax regulations were only recently defined in IRS publications, meaning they may not be incorporated in some income tax software. That includes programs used by some accountants. Those subject to the new 3.8% tax on net investment income, or Medicare surtax as it’s called, will want to pay special attention that the complex calculation is done correctly.

The privatization of tax collection

Speaking of tax season, it’s soon to be payday for the federal government. But what about those income tax returns that contain errors or underpayments but get missed due to a lack of government resources to audit? There’s been considerable backlash to government’s involvement in health care, but it seems there’s no major movement to privatize income tax collection. Hiring companies that work on a contingency basis and receive a percentage of monies recovered might make tax collection more efficient. Or the masses may just be okay with a slightly inefficient tax collection system.

Concierge medical services for the average person

Across the country, an alternative is developing when it comes to delivery of primary care health services. “Concierge medical service” typically includes clients paying a monthly or yearly fee for access to a primary care doctor, sometimes coupled with a catastrophic health insurance policy. While initially considered only an option for the wealthy, the elimination of insurance billing has allowed physicians to make this option more widely available. The Wall Street Journal estimates there are over 5,000 practices offering direct primary care across the U.S.

The steady decline of cable television

Cable TV subscriptions have continued to decline over the years. Multiple options have sprung up that allow people to choose what they watch and when, including Apple TV, Hulu, Netflix, and Roku. Marketwatch has even developed a handy chart for consumers considering a switch. For those that don’t necessarily have to watch everything live, there could be considerable savings.

The steady climb of Socially Responsible Investing

According to the US SIF Foundation, the Forum for Sustainable and Responsible Investment, roughly 11 percent of investment dollars are currently invested in socially conscious holdings. Traditionally, “Social Responsible Investing (SRI)” meant avoiding tobacco or gun companies. Over the years, the Foundation has added several categories for institutional investors to be mindful of. Topping the list of areas to avoid are Sudan and Iran, with executive pay, climate change, and political contribution considerations all included in the top 10.

 

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 dforbes@forbesplanning.com .

 

Related Slideshow: RI Communities with the Highest Tax Rates #39 - #1

How do the taxes in your community compare to other cities and towns in Rhode Island?

GoLocalProv has ranked communities from the least to the highest taxed on the basis of their tax rates, using newly released data from the state Division of Municipal Finance. The below slides list the tax rate per $1,000 in value for homes, commercial property, personal property, and motor vehicles for the 2014 fiscal year, which began last July and ends next June.

Along with the rates are examples of what taxes might cost a typical resident in each city or town. For residential taxes, this calculation is based on the current statewide median price for a single family home, which is $240,000. For communities with them, homestead exemptions are factored in using the latest available figures. For motor vehicles, the example used is a 2008 Honda Accord, valued at the maximum retail price of $15,150. The total cost of home and car taxes is then represented as a percentage of the median income for that community, offering a rough measure of how affordable taxes are for those residents as compared with the taxes in another city or town.

Data sources: the Rhode Island Division of Municipal Finance, the Rhode Island Association of Realtors, the Rhode Island League of Cities and Towns, the National Automobile Dealers Association, and the U.S. Census Bureau.

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#39 New Shoreham

FY 2014 Tax Rates Per $1,000 in Value

Residential: $5.21

Commercial: $5.21

Personal Property: $5.21

Motor Vehicle: $9.75

Tax Cost for Residents

For a single family home valued at $240,000: $1,000.32

For 2008 Honda Accord: $147.71

Total Taxes as % Median Income: $1.29%

Note: Real property is assessed at 80 percent of value. This is reflected in the community's ranking.

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#38 Little Compton

FY 2014 Tax Rates Per $1,000 in Value

Residential: $5.38

Commercial: $5.38

Personal Property: $10.76

Motor Vehicle: $13.90

Tax Cost for Residents

For a single family home valued at $240,000: $1,291.20

For 2008 Honda Accord: $210.59

Total Taxes as % Median Income: 1.56%

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#37 Jamestown

FY 2014 Tax Rates Per $1,000 in Value

Residential: $8.75

Commercial: $8.75

Personal Property: $8.75

Motor Vehicle: $14.42

Tax Cost for Residents

For a single family home valued at $240,000: $2,100.00

For 2008 Honda Accord: $218.46

Total Taxes as % Median Income: $2.84%

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#36 Charlestown

FY 2014 Tax Rates Per $1,000 in Value

Residential: $9.46

Commercial: $9.46

Personal Property: $9.46

Motor Vehicle: $13.08

Tax Cost for Residents

For a single family home valued at $240,000: $2,270.40

For 2008 Honda Accord: $198.16

Total Taxes as % Median Income: 3.56%

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#35 Narragansett

FY 2014 Tax Rates Per $1,000 in Value

Residential: $9.80

Commercial: $14.68

Personal Property: $14.68

Motor Vehicle: $16.46

Tax Cost for Residents

For a single family home valued at $240,000: $2,352.00

For 2008 Honda Accord: $249.37

Total Taxes as % Median Income: 4.06%

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#34 Bristol

FY 2014 Tax Rates Per $1,000 in Value

Residential: $12.80

Commercial: $12.80

Personal Property: $12.80

Motor Vehicle: $17.35

Tax Cost for Residents

For a single family home valued at $240,000: $3,072.00

For 2008 Honda Accord: $262.85

Total Taxes as % Median Income: 5.18%

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#33 Portsmouth

FY 2014 Tax Rates Per $1,000 in Value

Residential: $14.53

Commercial: $14.53

Personal Property: $14.53

Motor Vehicle: $22.50

Tax Cost for Residents

For a single family home valued at $240,000: $3,487.20

For 2008 Honda Accord: $238.61

Total Taxes as % Median Income: 4.87%

Note: Motor vehicles are assessed at 70 percent of value. This is reflected in the community's ranking.

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#32 Westerly

FY 2014 Tax Rates Per $1,000 in Value

Residential: $10.53

Commercial: $10.53

Personal Property: $10.53

Motor Vehicle: $29.67

Tax Cost for Residents

For a single family home valued at $240,000: $2,527.20

For 2008 Honda Accord: $449.50

Total Taxes as % Median Income: 4.93%

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#31 South Kingstown

FY 2014 Tax Rates Per $1,000 in Value

Residential: $15.47

Commercial: $15.47

Personal Property: $15.47

Motor Vehicle: $18.71

Tax Cost for Residents

For a single family home valued at $240,000: $3,712.80

For 2008 Honda Accord: $283.46

Total Taxes as % Median Income: 5.39%

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#30 Newport

FY 2014 Tax Rates Per $1,000 in Value

Residential: $11.71

Commercial: $16.23

Personal Property: $16.23

Motor Vehicle: $23.45

Tax Cost for Residents

For a single family home valued at $240,000: $2,810.40

For 2008 Honda Accord: $355.27

Total Taxes as % Median Income: 5.45%

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#29 Middletown

FY 2014 Tax Rates Per $1,000 in Value

Residential: $15.71

Commercial: $20.87

Personal Property: $15.71

Motor Vehicle: $16.05

Tax Cost for Residents

For a single family home valued at $240,000: $3,770.40

For 2008 Honda Accord: $243.16

Total Taxes as % Median Income: 5.58%

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#28 Exeter

FY 2014 Tax Rates Per $1,000 in Value

Residential: $14.72

Commercial: $14.72

Personal Property: $14.72

Motor Vehicle: $32.59

Tax Cost for Residents

For a single family home valued at $240,000: $3,532.80

For 2008 Honda Accord: $493.74

Total Taxes as % Median Income: 3.93%

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#27 Tiverton

FY 2014 Tax Rates Per $1,000 in Value

Residential: $19.37

Commercial: $19.37

Personal Property: $19.37

Motor Vehicle: $19.14

Tax Cost for Residents

For a single family home valued at $240,000: $4,648.80

For 2008 Honda Accord: $289.97

Total Taxes as % Median Income: 7.75%

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#26 Richmond

FY 2014 Tax Rates Per $1,000 in Value

Residential: $19.76

Commercial: $19.76

Personal Property: $19.76

Motor Vehicle: $22.64

Tax Cost for Residents

For a single family home valued at $240,000: $4,742.40

For 2008 Honda Accord: $274.40

Total Taxes as % Median Income: 6.33%

Note: Motor vehicles are assessed at 80 percent of value. This is reflected in the community's ranking.

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#25 North Kingstown

FY 2014 Tax Rates Per $1,000 in Value

Residential: $18.80

Commercial: $18.80

Personal Property: $18.80

Motor Vehicle: $22.04

Tax Cost for Residents

For a single family home valued at $240,000: $4,512.00

For 2008 Honda Accord: $333.91

Total Taxes as % Median Income: 6.18%

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#24 Coventry

FY 2014 Tax Rates Per $1,000 in Value

Residential: $18.66

Commercial: $22.49

Personal Property: $18.66

Motor Vehicle: $18.75

Tax Cost for Residents

For a single family home valued at $240,000: $4,478.40

For 2008 Honda Accord: $284.06

Total Taxes as % Median Income: 7.11%

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#23 Cumberland

FY 2014 Tax Rates Per $1,000 in Value

Residential: $15.78

Commercial: $15.78

Personal Property: $28.86

Motor Vehicle: $19.87

Tax Cost for Residents

For a single family home valued at $240,000: $3,787.20

For 2008 Honda Accord: $301.03

Total Taxes as % Median Income: 5.62%

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#22 Hopkinton

FY 2014 Tax Rates Per $1,000 in Value

Residential: $19.77

Commercial: $19.77

Personal Property: $19.77

Motor Vehicle: $21.18

Tax Cost for Residents

For a single family home valued at $240,000: $4,744.80

For 2008 Honda Accord: $320.88

Total Taxes as % Median Income: 7.80%

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#21 Warren

FY 2014 Tax Rates Per $1,000 in Value

Residential: $18.67

Commercial: $18.67

Personal Property: $18.67

Motor Vehicle: $26.00

Tax Cost for Residents

For a single family home valued at $240,000: $4,480.80

For 2008 Honda Accord: $393.90

Total Taxes as % Median Income: 9.15%

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#20 East Greenwich

FY 2014 Tax Rates Per $1,000 in Value

Residential: $22.90

Commercial: $22.90

Personal Property: $22.90

Motor Vehicle: $22.88

Tax Cost for Residents

For a single family home valued at $240,000: $5,496.00

For 2008 Honda Accord: $346.63

Total Taxes as % Median Income: 6.05%

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#19 Burrillville

FY 2014 Tax Rates Per $1,000 in Value

Residential: $18.58

Commercial: $18.58

Personal Property: $18.58

Motor Vehicle: $40.00

Tax Cost for Residents

For a single family home valued at $240,000: $4,459.20

For 2008 Honda Accord: $606.00

Total Taxes as % Median Income: 7.35%

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#18 Barrington

FY 2014 Tax Rates Per $1,000 in Value

Residential: $18.20

Commercial: $18.20

Personal Property: $18.20

Motor Vehicle: $42.00

Tax Cost for Residents

For a single family home valued at $240,000: $4,368.00

For 2008 Honda Accord: $636.30

Total Taxes as % Median Income: 5.07%

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#17 West Greenwich

FY 2014 Tax Rates Per $1,000 in Value

Residential: $22.55

Commercial: $22.55

Personal Property: $33.85

Motor Vehicle: $19.02

Tax Cost for Residents

For a single family home valued at $240,000: $4,600.20

For 2008 Honda Accord: $288.15

Total Taxes as % Median Income: 5.81%

Note: Does not include rate for vacant land which is $16.07. Has homestead exemption.

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#16 Foster

FY 2014 Tax Rates Per $1,000 in Value

Residential: $20.40

Commercial: $20.40

Personal Property: $28.03

Motor Vehicle: $36.95

Tax Cost for Residents

For a single family home valued at $240,000: $4,896.00

For 2008 Honda Accord: $559.79

Total Taxes as % Median Income: 7.00%

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#15 Scituate

FY 2014 Tax Rates Per $1,000 in Value

Residential: $33.37

Commercial: $43.20

Personal Property: $39.75

Motor Vehicle: $30.20

Tax Cost for Residents

For a single family home valued at $240,000: $4,484.40

For 2008 Honda Accord: $434.65

Total Taxes as % Median Income: 6.01%

Note: Real property is assessed at only 50 percent of value and motor vehicles are assessed at 95 percent of value. This is reflected in the community's ranking.

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#14 Glocester

FY 2014 Tax Rates Per $1,000 in Value

Residential: $21.24

Commercial: $24.14

Personal Property: $42.29

Motor Vehicle: $24.37

Tax Cost for Residents

For a single family home valued at $240,000: $5,097.60

For 2008 Honda Accord: $369.21

Total Taxes as % Median Income: 7.10%

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#13 North Smithfield

FY 2014 Tax Rates Per $1,000 in Value

Residential: $15.86

Commercial: $17.57

Personal Property: $42.75

Motor Vehicle: $37.62

Tax Cost for Residents

For a single family home valued at $240,000: $3,806.40

For 2008 Honda Accord: $569.94

Total Taxes as % Median Income: 5.54%

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#12 Lincoln

FY 2014 Tax Rates Per $1,000 in Value

Residential: $23.49

Commercial: $26.85

Personal Property: $36.89

Motor Vehicle: $30.66

Tax Cost for Residents

For a single family home valued at $240,000: $3,664.44

For 2008 Honda Accord: $464.50

Total Taxes as % Median Income: 5.57%

Note: Has homestead exemption.

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#11 Warwick

FY 2014 Tax Rates Per $1,000 in Value

Residential: $19.79

Commercial: $29.68

Personal Property: $39.58

Motor Vehicle: $34.60

Tax Cost for Residents

For a single family home valued at $240,000: $4,749.60

For 2008 Honda Accord: $524.19

Total Taxes as % Median Income: 8.79%

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#10 West Warwick

FY 2014 Tax Rates Per $1,000 in Value

Residential Rates:

  • For apartments with 6+ units: $35.26
  • For two to five family buildings: $35.26
  • For single family homes: $24.67

 

Commercial: $29.98

Personal Property: $39.00

Motor Vehicle: $28.47

Tax Cost for Residents

For a single family home valued at $240,000: $5,920.80

For 2008 Honda Accord: $431.32

Total Taxes as % Median Income: 12.70%

Note: For ranking purposes, the average of  the three residential rates was used.

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#9 Cranston

FY 2014 Tax Rates Per $1,000 in Value

Residential: $22.84

Commercial: $34.26

Personal Property: $34.26

Motor Vehicle: $42.44

Tax Cost for Residents

For a single family home valued at $240,000: $5,481.60

For 2008 Honda Accord: $642.97

Total Taxes as % Median Income: 10.48%

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#8 Smithfield

FY 2014 Tax Rates Per $1,000 in Value

Residential: $17.52

Commercial: $17.52

Personal Property: $61.06

Motor Vehicle: $39.00

Tax Cost for Residents

For a single family home valued at $240,000: $4,204.80

For 2008 Honda Accord: $590.85

Total Taxes as % Median Income: 6.54%

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#7 East Providence

FY 2014 Tax Rates Per $1,000 in Value

Residential: $22.78

Commercial: $25.21

Personal Property: $56.25

Motor Vehicle: $37.10

Tax Cost for Residents

For a single family home valued at $240,000: $4,647.12

For 2008 Honda Accord: $562.07

Total Taxes as % Median Income: 10.54%

Note:  Rates are for FY 2013. Has homestead exemption.

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#6 Johnston

FY 2014 Tax Rates Per $1,000 in Value

Residential: $28.75

Commercial: $28.75

Personal Property: $59.22

Motor Vehicle: $41.46

Tax Cost for Residents

For a single family home valued at $240,000: $5,520.00

For 2008 Honda Accord: $628.12

Total Taxes as % Median Income: 11.20%

Note: Has homestead exemption.

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#5 Pawtucket

FY 2014 Tax Rates Per $1,000 in Value

Residential: $23.06

Commercial: $30.88

Personal Property: $52.09

Motor Vehicle: $53.30

Tax Cost for Residents

For a single family home valued at $240,000: $5,534.40

For 2008 Honda Accord: $807.50

Total Taxes as % Median Income: 16.00%

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#4 North Providence

FY 2014 Tax Rates Per $1,000 in Value

Residential: $24.29

Commercial: $31.03

Personal Property: $69.41

Motor Vehicle: $41.95

Tax Cost for Residents

For a single family home valued at $240,000: $4,663.68

For 2008 Honda Accord: $635.54

Total Taxes as % Median Income: 10.55%

Note: Has homestead exemption.

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#3 Woonsocket

FY 2014 Tax Rates Per $1,000 in Value

Residential: $34.56

Commercial: $39.81

Personal Property: $46.58

Motor Vehicle: $46.58

Tax Cost for Residents

For a single family home valued at $240,000: $4,976.64

For 2008 Honda Accord: $705.69

Total Taxes as % Median Income: 14.45%

Note: Has homestead exemption.

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#2 Providence

FY 2014 Tax Rates Per $1,000 in Value

Residential Rates:

  • For owner-occupied residential property: $19.25
  • For non-owner-occupied residential property: $33.75

 

Commercial: $36.75

Personal Property: $55.80

Motor Vehicle: $60.00

Tax Cost for Residents

For a single family home valued at $240,000: $4,620.00

For 2008 Honda Accord: $909.00

Total Taxes as % Median Income: 14.21%

Note: For ranking purposes, the average of the two residential rates was used. 

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#1 Central Falls

FY 2014 Tax Rates Per $1,000 in Value

Residential: $25.72

Commercial: $37.06

Personal Property: $73.11

Motor Vehicle: $48.65

Tax Cost for Residents

For a single family home valued at $240,000: $4,728.36

For 2008 Honda Accord: $737.05

Total Taxes as % Median Income: 14.43%

Note: Has homestead exemption.

 
 

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