Property taxes for homeowners are steepest in Bridgeport, Connecticut

Captain's Cove in Bridgeport, Connecticut

According to a recent report in a June 2016 article on the Forbes website, Bridgeport, Connecticut ranks number one among cities with the highest property tax rate. The statistics were compiled from a study from the Lincoln Institute of Land Policy in Cambridge, Massachusetts.

The Institute, which calculated the tax rate by taking a percentage of a property’s market value, discovered that residents in Bridgeport pay 3.88% on an average price home, much higher than the meager .30% paid in Honolulu, Hawaii. (Honolulu has the lowest property tax rate in all the 50 states.)

After Bridgeport, Connecticut, the cities of Detroit, Michigan and Aurora, Illinois came in second and third with rates of 3.81% and 3.72% respectively. On the lower side of the spectrum, Cheyenne, Wyoming and Denver, Colorado ranked just ahead of Honolulu with 0.65% and 0.66% tax rates.

The reason that tax rates are so high in Bridgeport is because property taxes are used in place of sales or income taxes, which are not assessed in that location. Therefore, people pay, on average, around $1,890 in tax per year.

Compare that amount with Birmingham, Alabama, which collects income and sales taxes and property taxes as well. Therefore, residents pay, on average, about $2,430 each annually. Therefore, when you look at the property tax rates, you have to consider the whole tax package. While Bridgeport, individually, assesses a high property tax rate, it also does not include sales and income taxes in its total tax charges per resident.

You also have to consider the price of the real estate. For example, Detroit charges an excessive property tax rate. However, its median home prices are among the lowest in the US. Compare their tax rate of 3.81% with New York City’s 1.13% rate – a city which is also known for its elevated prices for real estate.

The average property tax rate over 53 cites showed a rate of about 1.5% while lower-than-average rates were charged in Honolulu, Denver, Boston and Washington, D.C. The study found that Phoenix recorded the biggest increase in its property tax rate while Sioux Falls, South Dakota experienced the largest decline.

The Five Highest Property Tax Rates

  • Bridgeport, Connecticut – 3.88%
  • Detroit, MI – 3.81%
  • Aurora, IL – 3.72%
  • Newark, NJ – 3.05%
  • Milwaukee, WI – 2.685

The Five Lowest Property Tax Rates

  • Boston, MA – .67%
  • Birmingham, AL – .66%
  • Denver, CO – .66%
  • Cheyenne, WY – .65%
  • Honolulu, HI – .30%

Again, you cannot look solely at the property tax rates when you are assessing the costs. You also need to know what, if any tax, is charged for sales transactions or income and the market value for real estate. All these considerations must be made when you are budgeting for a house or working in a community.


New Jersey retirees receive disappointing pension news

Freedom at the Sea

According to one CNN news report released on June 9, 2016, retirees who have worked as police officers, firefighters, teachers and government workers will not receive a cost of living increase. Instead, pension checks will remain at the same level they were in 2011. The report stated that the state Supreme Court on Thursday upheld a legal ruling that suspends cost-of-living increases for public retirees in the state.

The pensions, which were frozen in 2011 by Governor Chris Christie, are part of a bigger reform measure that requires some public workers to allocate a larger chunk of their paycheck to their retirement account. In response, retirees sued, claiming that the cost of living increases were safeguarded under a mandate that prohibits the state government from reducing benefits. However, the higher court ruled in favor of the state’s governor, citing that COLA adjustments are not protected, which, in turn, overruled an appellate court’s prior decision.

COLA, itself, stands for Cost-of-living Adjustment or is an acronym that means Cost-of-living Allowance. COLAs are pay raises that cover the cost of inflation, which affect one’s expenditures for rent, gas, food and clothing. According to the Social Security Administration, legislation that went into effect in 1973 provides for COLAs in pension plans and in employees’ earnings. Social Security and Supplemental Security Income (SSI) benefits are designed to keep pace with inflation when COLAs are enforced.

The Social Security Act features a uses for calculating COLAs. The formula bases COLAs on increases in the Consumer Price Index (CPI) for urban wage earners and clerical workers (CPI-W). CPI-Ws are determined each month by the Bureau of Labor Statistics (BLS). The last year that a COLA became effective was 2014. According to the news report COLA adjustments will stay suspended until state funds hit a specific funding target. The pension program in New Jersey covers around 770,000 retirees and workers.

Unfortunately, the pension fund in New Jersey is underfunded. Therefore, it is impractical to maintain COLA adjustments as it would severely affect the fund’s liability. As the fund is already $40 billion in the hole, including COLA adjustments would increase the funds’ liability by around 33%.

Nevertheless, workers are still unhappy about the Supreme Court’s decision. Wendell Steinhauer, the President of the New Jersey Education Association, said he was “outraged” by the verdict. He added, “Our members were promised a COLA as part of their compensation, and they did the work required to earn it.”


Growing number of self-employed entrepreneurs turn to personal loans


It seems even entrepreneurs are utilizing bad credit loans to cover their expenses.

Whenever the media publish articles pertaining to payday loans, it’s usually a profile of impoverished consumers in financial destitute turning to the short-term, high-interest option. Politicians and consumer advocacy organizations regularly call for legislation to rein in predatory payday loan stores in order to shield consumers from this alternative product.

But what about small- and medium-sized business owners? It looks like a growing number of self-employed entrepreneurs are taking advantage of payday loans for their own operations.

SMBs ‘Stacking’ Payday Loans

According to a new study by nonprofit microfinance provider Opportunity Fund, many small businesses received payday loans from alternative finance lenders, and the average annual percentage rates on these loans was 94 percent.

Speaking with 104 SMBs and their respective owners, the study shed light on the fact that it isn’t just consumers that are utilizing bad credit personal loan lenders anymore, but also American business professionals.

The study discovered that they collectively carried 150 loans. What was most startling from the report was that more than one-quarter of the survey participants were “stacking” their payday loans from multiple lenders. What’s also turning heads is how much these companies are paying.

Ostensibly, the businesses’ average monthly payments were 178 percent of their monthly income, and close to half (47 percent) of the businesses were focusing on all of their monthly earnings to pay back the debt. These aren’t good numbers for SMBs already struggling in this economy.

The report comes as a new study from the United Kingdom found that the self-employed are having to use payday loans to cover their late payments.

UK Freelancers Need Financial Help

The study, which was conducted by London finance start-up Ormsby Street, found that more than one-third (36 percent) of freelancers had to borrow from a payday loan store to pay for their overdue bills. Another 46 percent stress daily about not having enough money to live on.

In total, British freelancers maintained an average of £5,431.03 ($7,828.03) in late payments.

“Every freelancer knows that late invoice payment is one of the biggest frustrations, impacting cash-flow and causing much stress, from paying the mortgage to having enough money to live on,” said Martin Campbell, Managing Director, Ormsby Street, in a statement. “For a freelancer to be owed more than £5,000 is clearly unacceptable and threatens the emerging freelance economy in the UK, which brings flexibility and work / life balance to so many.”

For freelancers, it’s a common theme to not have enough funds to pay the rent, light bill or car payment. With dry spells, clients not paying on time and low fees to compete in a global market, many freelancers spiral into debt, who then must turn to payday loan businesses.

Ultimately, both studies reveal one thing: there is an opportunity for businesses in the finance industry to serve SMBs and freelancers alike when they’re in need of cash. The struggles that SMBs and freelancers face are immense, and they’d rather use a bank than a payday loan store.