Emptying the pockets of the poor
They seem like lotteries where you just can’t lose. They offer you money here and now. Money when you need it.
Your tax money.
But it is money for folks who have little and who will have to pay extra to the get money coming to them.
You surely have seen them advertised. In the parlance of the credit industry, they are called refund anticipation loans or RALs, and their most common customers are low-income folks, who use them to get returns due them since they earned so little.
As a newly released report from the Woodstock Institute points out:
They typically reduce the amount of money coming back to the taxpayer by 10 percent.
They are offered by tax preparers in cooperation with banks and payday loan operations as well.
The interest rates nationally can range as high as 140 percent and that does not include heavy fees for tax preparation and same day payments.
Low-income black taxpayers showed the highest percentage use in Illinois, according to the most recent statistics as analyzed by the Woodstock Institute. Similarly usage was high among low-income Latinos.
So, here’s a story waiting to be written. Go to their website for more data:
http://www.woodstockinst.org....and while you are there also check out their report on the failure of the government’s effort to stop the drain of mortgage foreclosures.
The good news from the report is that the low-income and mostly black and Latino communities that suffered heavy rates of foreclosure showed declines in 2009 in their home losses. But the reality, as the report suggests, is that the mortgages have largely dried up for these community. Again, a story that needs to be followed.
Let me know if you do any reporting on this. And if you want to brainstorm on how to do so, I’m around to help.
Stephen
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