The IRS Enables the Return of Refund Anticipation Loans

New Orleans   Refund anticipation loans or RALs, as they were known, were one of the most predatory products on the market in their heyday targeted solely to low-and-moderate income workers who were most desperate for their tax returns. They were on the other side of the digital divide so less likely to file with the IRS electronically. The money was theirs, and tax preparers, especially the big boys of the market, H&R Block, Jackson & Hewitt, and Liberty Tax Services all exploited this desperation.

This was a 21st century national campaign for ACORN, and we forced the first negotiations with H&R Block after 330 actions in a 6 week time period during the height of the tax season, and eventually ended up with agreements with all three of the companies to wind down RALs. Disclosures of the interest rates were part all of the agreements, but it didn’t really matter since even if it said the interest rate on the loan to get their money one week earlier than the IRS would deliver it would cost them 349%, displayed in a poster or on the computer screen, if you have to have the money to pay rent or buy groceries or fix the car and you have to have it right now, disclosures, no matter how predatory don’t matter. Eventually we got HSBC to withdraw as the primary lender to the companies for RALs for what they termed, “reputational reasons” because the loans were so exploitative. Finally, the IRS and eventually other government agencies jumped in and also condemned RALs, and they finally faded from the market.

Now, thanks to the IRS, they are back, and there is even less doubt about the potential victims now. In 2017, the IRS decided to deliberately delay refunds until February for any taxpayer that claimed the earned-income tax credit or the child tax credit. These credits are only available to lower income workers. Presidents from Clinton to Bush to Obama have argued that EITC is the best and largest “anti-poverty program in the United States.”

On their website the IRS claimed they were concerned about an “error rate” of between 20 and 27% for filers in order to justify these delays. Something is fishy here. This is the IRS. The error rate should be an exact number based on information they have at hand on how many corrected filings they required, so giving a fudged number raises questions in my mind. Furthermore, their advice is to preparers who enable incorrect filings, which the IRS concedes are largely based on the complexity and confusion involved in the EITC program. Why was the pain not pushed to the preparers, rather than the families filing who were delayed unreasonably in receiving their returns? Oh, and meanwhile the number of audits of higher income filers is in the dumps now!

The preparers saw an opportunity and seized it by offering RALs again. Admittedly, these were no-interest loans this time offered against the amount of the return, and they had loan limits depending on the company’s policies. The big boys report over 1.5 million RALs are reported already this tax season with a month to go. Block did 840,000, Liberty175,000, and Jackson Hewitt 485,000. For the preparers, this is just the cost of customer acquisition, since it is cheese in the trap to catch low-income workers who would be forced to fork over the preparation cost to get their refunds.

No matter how much sugar you put in the coffee, this is once again the IRS partnering with private preparers to expand their businesses. The only real question is how long it will be before RALs are back in full and terrible force again?

The only good news in this tawdry story is that overall filings are down so far this year, so some people at least have decided to wait all of the vultures out.


Hot Check Court Another Debtors’ Prison for the Poor

Sherwood's Hot Check Court Arktimes

Sherwood’s Hot Check Court

Little Rock   My brother-in-law and I agree on a million things, but those are family things, construction projects, upkeep of my trailers, automotive advice, and fixing anything and everything, but we do our best to NOT talk about politics, because he’s what you might call a Huckabee-man in Arkansas terms, and I’m anything but. We know where each other stands, so we know how to walk around most of the rocks in the road. This morning at dawn before I pulled out he said, “You got to see this!” He was following the news on Facebook, so I went over and looked over his shoulder where he was pointing. “Do you know about the “hot check” court? They’re running a debtors’ prison over in Sherwood.” I was all no, yes, and out the door. What the heck was a “hot check” court?

He was on to something though. Out of curiosity, I googled hot check court in Sherwood, which is a suburban enclave in Pulaski County across the Arkansas River and up the road from Little Rock. What you find with Google’s help is that, yes indeed, the City of Sherwood actually has a “Hot Check Division” of the Sherwood District Court of Pulaski County. How could it be that this little town has enough hot checks to have its own division? Are people driving from all over the county, the state, and the South in order to try and pass hot checks? The answer is, yes, sort of.

What had caught my brother-in-law’s eye was that the ACLU and the Lawyers’ Committee for Civil Rights Under Law had joined to file a suit for several defendants over the practices of this hot check division arguing that they were effectively running a court as a money printing machine exploiting low income defendants by larding on fines, court costs, and penalties connected with the original offense to milk the defendant and when they couldn’t bleed them dry, they were jailing them to keep the system going. The lawyers weren’t shy about referencing how similar this Arkansas mess was to Ferguson, Missouri where this was a system on steroids. They were also quick to mention that the Justice Department had jumped in and sued several venues around the country for using minor infractions as cash machines for their towns and cities.

In a report by the Associated Press one plaintiff is a good example of this system:

The plaintiffs in the case include Nikki Petree, a 40-year-old Arkansas woman who has been in jail for more than 25 days because she was unable to pay more than $2,600 in court costs, fines and fees related to a bounced check she wrote in 2011 for $28.93. According to the lawsuit, Petree initially faced $700 in court fines, fees and restitution, but the amount ballooned over the years due to related failure to appear and failure to pay charges.

The City of Sherwood of course denies everything. Their claims though seem hollow. They argue that it is only after the third or fourth hot check that they jail someone, and that they offer payment plans to resolve the earlier problems. I’m sure no one has every bounced a check, which is what a hot check is, essentially an NSF or non-sufficient funds matter, but these days if you are on not on top of your balances or a deposit goes bad, you could bounce a half-dozen checks in one sitting, bing, bam, boom! And, the City is in cahoots with the County, because Pulaski County has been sending over hot checks for more than 40 years to Sherwood to crank this ATM for them.

The AP reports that this adds up to a pretty penny.

The groups say Sherwood relies on the hot check fines and fees as a significant revenue source for its operations. The city’s receipts from district court fines and forfeitures were estimated to be at least $2.3 million in the 2015 fiscal year, Sherwood’s third-highest revenue source after city and county sales taxes, the lawsuit said.

Before you start South-bashing and pretending that this is just something you find in the backwoods or in broke-ass states like Arkansas, the lawyers are clear this situation exists in a lot of counties around the state for sure, but all of us know that this is common increasingly all over the South and the country, and certainly not confined to Missouri, Arkansas, North Carolina, and other places that have been in the news for creating modern day debtors’ prisons on the backs of the poor in order to avoid fair taxation and harder political choices.


Anti-Union Forces Leaving the Courts and Statehouse to Hit the Doors


Freedom Foundation Campaign Ad

New Orleans   The assault on unions is getting very personal. The legislative and legal attacks are part of the environment of constant struggle between unions and companies of course. People try to talk about America as a classless society, but when it comes to the labor-management tussle at work and in community, the class struggle is still part of the everyday experience.

Recently this has been politicized more crisply, especially after Citizens’ United and the surge of money into politics, when mega-rich, hyper-conservative gazillionaires realized that unions were one of the few institutions on the other side of the political divide that had the base and motivation to cobble together the dollars to meet them partway. What started with hate then morphed into strategy, and from there the tactical targets were clarified.

The right realized that the deep labor union pockets were still in the public sector since the industrial and private sector membership was falling like a rock towards 5% membership, if not below. If public sector unions and their membership could be eroded, then there was an almost open field for the right. So we’ve had Harris v. Quinn that broke union shop for homecare workers starting in Illinois. We’ve had near misses for union shop for school teachers with Justice Antonio Scalia’s death allowing us to dodge the bullet. And, thanks to the Koch brothers and their allies with ALEC, we’ve seen one statehouse and legislative chamber after another go right with new right-to-work campaigns and successes even in states like Michigan, an evisceration of public employee unions in Wisconsin, withdrawal of recognitions for lower wage workers in homecare in Michigan and Ohio, and more.

Now, they are engaging in hand-to-hand combat with teams of canvassers going door-to-door to attempt to convince union members to drop their membership and leave their unions. The Wall Street Journal reported on this new alarming anti-union tactic. A group called Freedom Foundation has raised a budget of more than $3 million in 2015 to employ hundreds of outreach people to work the list of union members in Oregon and Washington, available through public information, and do home visits with the sole purpose of getting home health and home childcare workers to withdraw from their union, which is the Service Employees International Union in this instance.

Tom McCabe who heads the Freedom Foundation claims that they have “knocked on the doors of about 15,000 home health-care and child-care workers out of about 50,000 overall in Washington state since July 2014.” He also claims he is targeting about 35,000 workers in Oregon. He also claims “the number of unionized child-care workers has fallen by 60% since he started the effort.” If true, they might have done 4000 or so home visits and convinced a couple of thousand workers to drop their membership at a cost of about $1500 per drop. That might make his program too pricey even for the mega-rich. Putting even more cold water on his claims, the head of the union in Washington, David Rolf, was quoted as saying that McCabe, “talks a big game, but they just aren’t having the impact they claim to be having.”

I’m sure Rolf is right, but that doesn’t mean this is any less painful for the union. This is about money. This kind of door-to-door, hand-to-hand combat means that a good part of the money the union might have spent on “offense,” in expanding rights, wages, and benefits for its members or new organizing, is now having to be spent on “defense,” to put organizers and others in the field to offset withdrawals and increase membership percentages. The objective of the conservative forces is to reduce labor’s expenditures on politics, and a field program like this has to be met in full and in force, allowing conservatives to win at either heads or tails if they reduce the level of contributions unions can make to advance their members’ interests.

The article in the Journal was obviously sales-and-promotion for McCabe and his so-called Freedom Foundation. He says he wants to take this door-to-door attack to California, Illinois, and Pennsylvania. We better hope he doesn’t succeed, but in the meantime, his advertisement, needs to also be our call to action.

Freedom Foundation Door Knockers

Freedom Foundation Door Knockers


Hope for Cities or Just Developers?

Looking northeast at soon to work LinkNYC station

soon to work LinkNYC station

New Orleans   It seems like cities are starting to get more attention, and if that’s true, that’s a good thing, but reading a recent special feature on cities, it’s not something without contradictions and concerns. This is true especially if you try to figure out where low-and-moderate income families and minorities fit into the coming profiles of the future. In some ways they just are not in the picture at least the one offered in the main from the New York Times, and this despite a recent feature in the same paper that talked flatly of the almost irreversible “whitening” of San Francisco where high housing costs and extreme inequality is leeching out the African-American community.

Part of the premise of some of the new hope for cities from the pundits and professors is the world seen dimly through the grim view from the suburbs. There is finally a consensus that cities are “safer,” which means they are ready to come back in again. Once again the question of “safer” for whom is unavoidable, but facts are facts, so we’ll ignore the bias for a moment. The same lens from the Trumpistas has all of us drowning in crime and gore in the urban space without being accompanied by the full disclosure that many of the zealots have done little more than drive quickly through cities for years, do their business, and leave before nightfall.

Unfortunately, reading the various pieces it was hard to feel comfortable about these new twists on urban revival. First of course there are huge, glaring omissions already mentioned, but followed quickly behind is the realization that the dominant perspective is not people-oriented really, but more developer promotions.

The examples of innovations are telling. There’s LinkNYC which would replace all remaining public telephone booths in New York City with wifi enabled terminals that can do tricks like recharge smartphones faster. Not surprisingly, this is paid for by tech companies and digital ads that will be on the booths, an expropriation of a public utility, and of course forget about lower income folks who still need those pay phones. There’s an apartment & condo complex in Austin and billionaire-driven building developments in Seattle that are at best ho-hum, but here are passed off as part of “remaking the modern cities.” There’s a story of Reno hoping to be Seattle and Kansas City about to have a “the largest co-working space in the world,” which is neoliberal, developer speak for building a monument to the gig economy and the decline of fulltime, firm-based employment.

The exceptions prove the rule in this parallax view of urban development and the modern dilemmas of the city. There is a piece on the rightly well-publicized and highly touted repurposing of a bank on Chicago’s South Side by Theaster Gates, Jr. in a celebration of black culture and an indictment of racism in the 97% African-American community there. There is also a discussion with an architect of the development of public space, which cannot paper over his conclusion that there is little and less being done.

The unaddressed problem is inescapable: where are the people – all the people – and what is being done to make a better place in the city for them and not just for young, white professionals and tech workers so many of these cities desire.


10% is Not a Solution for Childcare Costs and Student Loans

paying-billsNew Orleans   In the last couple of days I’ve read various campaign pronouncements on capping the cost of childcare and capping student loan payments. Hey, tell me we can’t all get behind something like that.

But, I was struck by the fact that the ceiling on both of these onerous burdens for millions of working families were targeted at 10% of their annual income. Many of them are the same struggling families who are trying to raise young children, which means significant childcare costs, and pay student debts simultaneously. So even if we were capping both at a combined 20%, I started to wonder, would these families make it? Were these real reforms or a shuffling of costs on the Titanic?

So, I started looking around. Here’s the word from the Department of Labor.

The average income in the U.S., by household, was $63,784 in 2013, according to the Consumer Expenditure Survey conducted by the U.S. Bureau of Labor Statistics. Here’s how the average household budget breaks down:

Expenditure Category
Annual Average Cost
% of Budget
Utilities and Other Household Operational Costs
Social Security Contributions, Personal Insurance and Pensions
Debt Payments or Savings
Cash Contributions
Apparel and Services
Personal Care

Childcare isn’t even on the list for the average family, so that 10% or more than $6000 that would have to come from some reductions in the list of basic household expenses. Education is on the list at 2%, though not as debt, and if fact on this hypothetically average list debt payments and savings are in the same category at 8%. In this cash crunch let’s assume the whole 8% would go to school loans and savings are put off for another sun shining day. This family would still be 2% of their income short, which now means they have to find $7200 and change to make ends meet and pay the bills, if and when this reform were ever implemented.

Drop entertainment at 4%, cash contributions at 3%, apparel and services at 3%, vice at 1%, and personal care at 1% and we get there, as long as the family can essentially wear old clothes and go to rummage sales, learn to play cards and look out the window for thrills, hold onto every spare dime and avoid the collection plate, learn to cut their own hair or take up begging on the streets and so forth. Is that a life? Is that possible? Hard to believe.

And of course there can be no rainy days in this family’s future. An emergency, a breakdown, a layoff, or a health crisis and this family goes under. Remember too that this is the average family so half of the households are even in worse shape than $63000 in annual income or may live in housing in much of urban America where 30% of annual income versus this optimistic gauge of 16% is considered a gift from heaven. We all know people now living in cities where half of their income is going for housing.

What’s my point? You could see it coming: a 10% cap doesn’t get the job done. Only the exceptions can live by such rules. In order to right size the economics of the average American family we need to see some loan forgiveness around student debts and we need some direct subsidies for family childcare. This neoliberalism, pay-as-you-go-under program has failed and is increasing the equity gap by leaps and bounds.


Working Families on the Move

working-families-party-logo-fbNew Orleans   Luckily we were able to catch up with Dan Cantor on Wade’s World this week.  Dan is the national director of Working Families now after spending most of the last fifteen years as executive director of the Working Families Party of New York.  The WFP, as it’s known, garnered a lot of attention recently for its role not only in supporting the game changing victory of Bill DeBlasio as New York’s new mayor with his “tale of cities,” but also in doing the hard work to get City Council members elected in a number of the boroughs to bring the Progressive Caucus up to a majority of the large 51-member body.  

            Talking to Cantor there is obvious excitement over what the coming years may hold for New York City paving the way for a progressive future with DeBlasio unabashedly refusing to simply cater to the middle of the road but instead proudly embracing the importance of change in politics and governance.  He described the inaugural speech of newly elected Leticia James as Public Advocate as moving for its articulate analysis of the divided city that must now be bridged.  No doubt it was moving for Cantor and the members of the Working Families Party to also reflect on the fact that James had been initially elected to the City Council herself on the ballot line of the WFP itself in a rare exception for the party, which normally practices fusion with other parties almost religiously.  Fusion was the common practice of cross endorsement by different political parties of candidates which was the norm in the United States until the watershed 1896 election prompting many states, though not New York and a handful of others, to ban fusion over the first decade of the 20th century. 

            Not surprisingly with the victory and attention in New York City and the fact that the eyes of progressives all over the country are on the mayor now with hope for his new programs to reduce inequality, Cantor’s phone has been ringing and emails have been beeping with interest to expand Working Families into additional states.  That’s hardly a new idea, since Working Families is already in six states in addition to New York including Connecticut, New Jersey, Maryland, DC, Pennsylvania, and Oregon, where the successes have been significant even if less well publicized.

            In Bridgeport, in a bitter battle, the Working Family Party of Connecticut was able to elect the majority of members on the school committee, showing well-traveled school superintendent, Paul Vallas, the door and beating back a privatization effort.  I especially enjoyed that news remembering when ACORN members in Bridgeport were elected to the majority of seats in that same school committee 30 years or so ago signaling the first time Puerto Ricans won places in public office there. 

            The Working Families success is not just in elections and in fact part of what distinguishes the party’s work is its ability to unite people around issues, rather than just candidates, which could also make the transition to successful governance easier for the party, since they are more committed to policies than politics.  In Oregon, Cantor explained that they have been instrumental in pushing forward a novel, first-in-the-nation effort to turn higher education funding upside down, by having students of the state’s universities start paying reasonable percentages of the cost AFTER they graduate according to their paychecks, rather than in big burdensome loans on the front end saddling them with debt for decades.

            If progressives and our principles are going to prevail, we need to make sure the “long game,” as the New York Daily News called the strategy of the Working Families Party, is supported and sustained, so this kind of critical political capacity is able to fuel the kinds of changes we need across the country to create equality and justice.