Wednesday
16Feb
Poor Communities and Advocates Fight Tax-time Deception
Wednesday, February 16, 2005 at 08:25PM
As tax-time draws near, millions of low-income Americans will
rush to obtain a cash advance on their tax returns in the form of a
short-term loan to help pay bills or buy groceries. At tax service
storefronts dotting impoverished neighborhoods across the country,
employees dressed as Uncle Sam and the Statue of Liberty will greet
them at the door -- a marketing gimmick aimed at a quintessentially
American blend of pride and economic anxiety. Awash in congenial
advertising, consumers might not realize they are borrowing money that
already belongs to them, and this "instant" refund does not come cheap.
According to the most recent data, by processing so-called Refund
Anticipation Loans (RALs), every year, corporate agencies skim well
over $1 billion dollars off of people's Earned Income Tax Credits. Also
known as EITCs, the tax credits are specifically geared toward easing
the tax burden faced by low-income Americans. Despite some government
regulations on high-cost, short-term loans like RALs, advocates say
service providers easily find ways to gut people's refunds through
heavy service deductions. National and local advocacy groups are
mobilizing against opportunistic lenders that prey on low-income
taxpayers through legislative action to curb predatory lending, direct
pressure on corporations, and financial literacy campaigns. To help
protect low-income communities from exploitation, the Association of
Community Organizations for Reform Now (ACORN) is campaigning in 65
cities against deceptive RAL practices. [more]
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