A long time ago, credit card interest was deductible. I think it should be again. The present system is not fair—certain practices are not acknowledged for the substantively regressive hardship they present.
The Public Government Safety Net
![[FDR]](files/pd-fdr-1933-128x1501231313483.jpg)
In times of need, we may draw on savings or turn to friends, family, and community resources. But when these fall short, ![[LBJ]](files/pd-lbj-bw-128x1501231313575.jpg)
we look to government as our final safety net. Since the time of the New Deal, and later the Great Society, and as our society has become more affluent, we have tended toward acknowledging the importance of the role of government in protecting our weakest citizens. I have argued that a society that is both prosperous and humane should take on the goal of providing a safety net for reasons that go beyond mere charity.
Anything from food to clothing to health care to education still needs to be paid for when one has no job, and yet—whether by oversight or by deliberate design—the government isn't always racing in with help.
Unemployment insurance sometimes helps, but it is limited in its scope to less than the person was making while employed, so there's a problem right out of the box. And it doesn't cover health care, which is often tied to the employment and typically becomes very expensive at that moment of a layoff when the unemployed person is suddenly paying not only their own contribution but their employer's as well. Everyone's situation is different, but the point is this: the public safety net we now offer has holes in it big enough for people to fall through.
It's nice to say that people should always plan ahead, but sometimes they don't, and quite often they can't—probably more often than appeases the conscience of the Haves in a society that is increasingly sharply divided into Haves and Have Nots. But for whatever reason, the situation comes where help is required and no help is there even from the government.
And yet life must go on.
Payments for mortgages, medical bills, home heating (and cooling), and food must still be made even at times that are financially inconvenient.
Commercial Lines of Credit
So when you're out of work and have bills to pay or when you're sick and cannot afford health care, if the public government cannot help, and regular bank loans are not readily available, all paths lead to the option that doesn't pester you with stupid, demeaning, or embarrassing questions about why you need money when you're making no money—the option that doesn't force you to admit the obvious, that you wouldn't be asking for an unsecured loan if you had an asset to offer as collateral.
We are at our most vulnerable when we're out of work, and yet it's assumed that the free market will resolve matters. Yet the free market knows that it can prey on people in times like these and get concessions no reasonable person would want to make—because for an individual thus alone, thus abandoned by their job, there is no other option. These are often people who did not let their company down—their company let them down. And yet we treat them as if they have nothing to offer and throw them to the wolves by allowing them to negotiate credit at these most vulnerable of times.
Commercial business needs credit at these times, too. But the government makes lines of credit more easily available to them, and at much better interest rates. ![[high rates]](files/rates-250x1181231313675.gif)
Many prospective businesses have no asset to their name and may well outright fail, even spectacularly, and yet loans are available to businesses at rates that are not 25%, 36%, 75%, etc.—the kinds of rates that the free market capitalists tell us are not usury and are merely the market working happily to reach a fair price.
It isn't that the risk of business is less. The entire business world just collapsed around a hard-working workforce, and even now the government is seeking to offer single-digit rates to businesses that have a track record of failure to get them back on their feet, while doing nothing to help hard-working individuals who have never failed to do their job. It's just that the Public Government cares more about business than about ordinary citizens, especially those at low income levels. Public Government actively monitors and manages the economic health of business credit. Not so for the lesser class—for people, especially people who are not “of means.”
It's become fashionable for people who have not run into economic difficulty to claim that everyone should cut up their credit cards and operate with no such safety net, but I find it doubtful that business would advise shredding their line of credit. Credit is necessary to span unpredictable variabilities in expenses and income. It's one thing to not use a credit card. It's quite another to not have one.
While a commercial line of credit is an ordinary business tool, a credit card really is not. For one thing, it is not adequately regulated. So thinking of it as a poor man's business tool is not quite right. Let's try an alternate metaphor more suited to the lack of control that ordinary people experience when dealing with credit cards.
Private Government, and Commercial Safety Nets
A credit card issuer is a kind of private government, issuing passports freely in times of calm, allowing you to pretend a credit card is really just a charge card, something you pay back every month.
Those who are not wealthy know another truth about these cards: They are a place to request economic asylum when bills get out of hand.
Government is “a compulsory territorial monopolist of protection and jurisdiction equipped with the power to tax without unanimous consent.”
—The Myth of National Defense, page 8, as quoted by Wikipedia
As private governments, they offer a safety net to their citizens not offered to many citizens of the United States. Yes, they take people at their most vulnerable. Yes, they dictate their own terms with no fear of retribution. Yes, they tax mercilessly. But they provide aid where the public government does not, shelter in life's most awful of storms. As horrible as they are, they are also the savior of many people because they offer a chance just to survive where there may be no other chance.
So if one doesn't have cash and no one, including the public government, is offering help, there may be little other option than to use credit cards if they are available. This is true even of people who have faithfully maintained a zero balance on their cards. Because when you need money, you take it where you can get it at the rates it is offered.
It's sometimes easy to get lulled into believing that all problems with credit cards are the result of casual overspending that could be avoided by merely applying more self-control. Doubtless that's sometimes true. But not always. It is important to see that credit cards often serve a critical societal function that is not so easily dismissed: They offer necessary economic insurance to those to whom the public government turns a blind eye.
Private Tax
Black’s Law Dictionary (sixth edition, page 1457) defines a tax as a “pecuniary [i.e., monetary] burden laid upon individuals or property to support the government,” and goes on to call it “a payment exacted by legislative authority.”
Credit card interest rates operate as a “private tax.” The operating costs of citizenship in the private government of a credit card issuer are paid for by these taxes. It's set high by the credit card companies and there's no one there to say it should be otherwise. Congress has better things to do. But with their silence, they give consent. And Congress does the various laws to stand that provide enforcement of whatever these private governments decide about how the lives of certain people will play out.
What the credit card companies decide is, effectively, law. It's easy for the affluent to say that people could opt not to use the cards, or they could go for a different card, but the decisions that bind one to a credit card company are made at times when these are really not options, and when there is no one there offering alternatives. Such assertions show callous ignorance of the true burdens of being poor.
And, of course, if these interest rates were really recognized as what they are, a tax, the real government, the public government, would allow a tax deduction, not just on investment-grade loans like rich people with houses can afford, but also on street-grade loans like ordinary people who can't afford houses are left to take. It's not normally considered ok to tax someone twice. But it is when it's the poor. Who's going to speak for them? They're too busy working to pay their taxes to complain.
It can happen that all of one's income is going into paying this private tax even while the government—the real one, the public one—is looking at the person's income and thinking all of that money is available to be taxed. The ordinary citizen, the person who depends on credit cards to make ends meet, does not get a break on this.
If they were a business, they could deduct this interest. Because the government that caters to business—the public government—cares about this matter. Not only does a business get a lower borrowing rate, it gets a tax break to help pay the interest on money borrowed. But private citizens of the private government, the government of the lesser class, get higher rates and no help from the public government in paying the interest.
They may be living at a subsistence level with all of the money they pay credit card companies going toward interest. That means they are creeping ever more into debt and yet the the public government is still taxing them as if they have net income they should be sharing—ironically, so that more affluent people, those who really do have net income, don't have to pay tax. No wonder the poor cannot climb out of this state. The basic accounting is simply not fair.
Handouts vs. Double Taxation
There are some who manage their finances in such a way that they save up money for emergencies. And sometimes this works. But it's disingenuous to say that this can always work. It's trivially possible to show that there are possible emergencies that can come up in life that are bigger than one has had time to save for. Those who don't run into this case should count themselves lucky, but should stop claiming that just because that worked for them it will necessarily work for others. In the general case, it simply can't. And while it's clear that an increased savings rate would be helpful, it's not a complete solution.
Also, insurances such as life insurance and medical insurance are luxuries that many simply cannot afford because they already have too little money to meet today's needs, much less tomorrow's. Such people go uninsured not because they are too stupid to realize that insurance matters, but because they simply have no other choice.
It would be nice if money were made cheaply available to poor people in urgent need, as it is to rich people and businesses in urgent need. But I'll make the case for that another day. We can't solve every problem at once. Sometimes people have to help themselves.
That's my point. A person asking to not be taxed twice is not asking for a handout. They are trying to help themselves. ![[economic tug of war]](files/tug-o-war-sm2x1231436968.gif)
But if they are faced with double taxation, they are not going to be able to do that. To borrow a phrase so often heard from Republican lips (usually when talking about the need to reduce “onerous” taxes on millionaires): “it's their money.” It only becomes the government's money when the government sees the opportunity to prey on them. It isn't asking for a handout to say that a person who is not breaking even should not be taxed; it's just asking that the government refrain from kicking people when they're down by doubly taxing them.
Pay-As-You-Go Socialism
Maybe we'll fix some of these inequities in upcoming years—health care, for example—but we probably won't fix all of them. People will still have emergencies they're not prepared for. 
So since the US is not a socialist state, we offer the capitalistic alternative: “pay-as-you-go socialism,” in the form of credit cards, available at market prices to those too poor to qualify for the well-regulated and more affordable interest rates the federal government offers to people of means. And, realizing credit cards are their only available alternative, less-well-off consumers swallow their pride and agree to pledge allegiance to these private quasi-governmental entities and to pay whatever private tax is required, in exchange for the financial services they require to get them through times of need where the real, public government has left them helpless.
And perhaps this seems fair to die-hard fans of the free market. But I'm not so sure that's a fair analysis since, the terms under which these cards are offered are not really subject to market forces. And, importantly, people of greater means would not have to be going through this because they qualify for government-sponsored loans at much lower rates.
They're in this position not because of some crime, but merely because they're poor. Had they been a bit richer, they might have qualified for the better loan rates straight from the government, or for tax deductions. So yes, maybe they do voluntarily enter into the agreement with the credit card company once they realize they are involuntarily not part of the elite club of people who don't need to do that. But I find that way of saying it just a little disingenuous; pardon me if I prefer other phrasing.
When people of greater means have access to lower interest rates and tax deductions, while people of lesser means do not, social justice cannot be achieved. People who have very little option but to use high rate credit cards to get them through hard economic times must put up with a practice that amounts to double taxation tax on money already consumed by their payment of this private tax. If you don't like the terminology I've picked, it doesn't change the fact of the inequity. One way or another there is an extra tax that needs to be accounted for. Call it, if you prefer, a tax on being poor.
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Comments
Thanks for bringing this subject to light.
Thanks for your cogent points on this vital issue. When the statistics for average credit card debt per person and per household are understood your argument regarding personal versus commercial lending is strong.
Many families are literally one accident or health care situation away from the type of need you described. Home foreclosures are a glaring evidence of this. Equity in the credit card interest system would offer immediate help to more households than can probably be estimated.
Whether one supports the idea of credit card usage is not the point. Safety nets should first and foremost be instituted for the working class without which everything else eventually crumbles in our system.
Rated and appreciated.
We have a lot of harmful myths in the US about being rich and being poor. I have long observed that many people really believe the propaganda that "if you just work hard you can make it". If you're working 2 jobs at minimum wage to support your disabled baby you are never going to "make it". And I have also long observed that there is a moral stigma attached to being poor, as if being poor meant there was something wrong with you, that you deserved to be poor due to some moral failing. But as long as the majority accepts all this unquestioningly then the status quo is maintained. And as long as the majority continues to be unable to view personal financial issues such as credit debt within the larger context of how capitalism, wealth and power really operate then that will never change. Talk about your mass delusions - yes, Virgina, it is possible to infinitely increase profits, this is definitely sustainable over the long run! Here's some more bread and circuses for you, dear.
So let me instead just touch on the overall framework from which you're addressing the topic, to get a sense of how (some) other people eventually wind up at different final conclusions.
The New Deal and Great Society are considered by some to be a problem, not an achievement. But again, that's more of a conclusion than a starting place.
You talk about how our society is affluent and prosperous. You talk about how government (and in some cases, businesses) ought to provide things to those less fortunate. But you don't talk much about where that wealth comes from, or why it is there in the first place.
There's a long-standing high-level conflict between those who focus on "redistributing the pie", vs. those who focus on "growing the pie". Surely, the truth lies somewhere in between. But I just want to mention that government doesn't really have or create wealth; people do. So the real question you need to consider is, is it a better world for government to take wealth from working Sally, in order to give it to non-working Joe? It might be, or it might not, but you can't come to a moral conclusion without considering the source of the wealth too.
Finally, you lay out a scenario of a person who has no options. But it might be worth going into more detail. Are they able bodied and 18? Or disabled and 45? Do they have a family to support? Why did they ever get into a situation where they have a family to support, if they were living paycheck to paycheck and couldn't afford insurance or health care? It seems like one first ought to become responsible for one's own life, before taking on additional responsibilities. So, I'm curious about the life path that led to their current crisis. (And yes, I know that sometimes bad luck just happens. But such a huge string of bad luck isn't typical.)
As for the 20-year-old healthy male, my own intuition is not that there are no options; it's that the person sees themselves as "better than" some of the real options that exist. Why not get a job as a janitor at McDonald's? Or join the military? Or live in a homeless shelter or eat at a soup kitchen? Or beg extended family for help? Once you start saying "I don't want to" or "I shouldn't have to do that" or "the world ought to offer me cheap credit cards instead", my sympathy drains rapidly. Not you've not only given up on responsibility for taking care of yourself, but you're also starting to dictate the kinds of charity you're willing to accept.
What happens to poor people in Bangladesh or India, who don't have the option of credit cards, at any rate? What actually happens to their lives, when they fall into the same circumstances?
At the end of the day, you're asking Sally -- perhaps a hard-working single mom, who not only is providing for herself and her family, but also planning for a rainy day and insurance and health care -- to give up even more of her paycheck so that unemployed Joe, who didn't plan ahead and didn't take care of himself, can avoid needing to go on food stamps, or sell his (heavily mortgaged) house and return to renting, or whatever his alternative is.
At the end, I guess it comes down to whether you view government as a parental figure, who is wiser than you and richer than you, and who will pick you up when you stumble, to make the world a nicer place than it otherwise would be. Or, alternatively, that the world is just you and your neighbor, working hard to better yourselves, and government is really just another name for mutually beneficial arrangements that you and your neighbor can agree to enter into, to benefit you both. But there's no extra source of wealth out there in the world, besides the hard work that you and your neighbor do yourselves.
Summary: I'm not opposed to a safety net in society (and agree that it's a good idea), but our fundamental model of how the world works seems so different, that it's hard for us to provide arguments that the other finds persuasive.
If you want them to be in this situation, and that must be a terribly lonely position for you, at least don't tax them like they're making money. I'm sure you don't want it personally for anyone, but it is a necessary consequence of the position you take so you have to own at least some of that. I believe, at least in the US, there is enough money to assure that everyone had at least food, probably housing, and maybe some medical care without bankrupting the population. It would require wealth redistribution to do it, and I'm not advocating it. But I'm also not letting you hide from the consequences of what I feel you are more directly advocating.
But back to the topic of this thread, which is the taxation of credit that people can, do, and sometimes must use to bridge the gap created by the policy you seem to favor: You wouldn't do it for a business—taxing it on income that was not net income. At least, I assume you're not advocating that. If you have a tax on gross income, I don't know how the market could work, but you've studied the market better than I so maybe you do.
You wouldn't tax a business on interest it was paying for the loans it chooses to take on. So why is an individual, left to themselves, faced with making choices that are not serving them well, taxed on the cost of borrowing money to make ends meet?
As to taxing net income vs. gross income ... you may be right, perhaps I missed the point of your post. I realize that businesses are taxed on profits, aka net income. So you want individuals taxed on net income also? But that's a larger suggestion than just credit cards. Should they also deduct living expenses? Rent, food, medical ... vacations, movies, etc.? Should every individual submit their personal life to GAAP accounting?
It's an interesting idea that I hadn't considered. I'll have to think about it.
(As to the narrow question of deducting credit card interest, one problem is: how do you know that the use of the credit card borrowing was the lifeline scenario you have in mind, rather than just buying a big-screen TV to watch the Superbowl? How do you distinguish those cases? Secondly, many have argued that borrowing using credit cards is almost always a mistake, yet a deduction policy would actually encourage this poor financial planning. Society ought to be discouraging this choice.)
Credit cards, in my view, are a trap set especially for the poor. If you convince people that their self-worth is tied to their possessions and they don't have large incomes, then make credit available at a teasingly low introductory rate. Suddenly, you have millions of people in snared and living beyond their means.
Yes, no credit cards sometimes mean that one can't have everything at the very moment that they desire it. But I don't think that is such a bad thing.
Most people think that my bills are astoundingly low. But it is such on purpose. I don't own a whole lot of superfluous things. which leaves money for the essentials.
I don't mean to insult anyone but I truly believe that we have to get over the notion that if we want "it" we therefore deserve "it" and get back to a more self reliant attitude.
Respectfully.
I'm always a little bemused when I hear talk about "self-reliance" as if anyone in a developed economy is really self-reliant. We all operate within a complex network of mutual support, with imperfect mechanisms for distributing the benefits and costs.
Can't we acknowledge that we're part of an extended community with mutual obligations, that the suffering of one is a blot on us all, and the success of any reflects the contributions of many?
As you know, but others reading along do not, I put a large number of home improvements on an unsecured credit card for a time during a home renovation, only to find that I could not deduct the interest paid on those actual home renovations because they were not secured against the house even though I had actually invested in my house. Meanwhile, people who bought a yacht and secured it against their house, who were not buying more house and were actually diminishing their degree of home ownership by so doing were allowed to deduct the interest because they were transferring the cost of the yacht to the house, effectively paying off the yacht instantly and leaving themselves with a home loan anew. There is a gigantic inequity in that, which is how I came to notice things like this.
You also know there are many other pieces to this story that I'm preferring not to lay out in gorey detail, but that one at least I know for certain to be just gross. And it plays out all the time for people for whom this deduction is not available, who are paying massive interest and not being able to deduct it. The problem is that it's hard to say whether if you buy food and run short of money to buy cable TV or if you buy cable TV and run short of money to buy food whether those are different or not without more government invasiveness than I or you might want. What is clearly true and not hard to tell is that the financial vehicles for people of wealth to win are different than those who don't have wealth.
And yes, in another post I might argue that indeed one ought not be taxed on necessities. Massachusetts does not tax a great number of things like food (at least from a grocery store, they do tax restaurant food), clothing, etc. It seems to me fundamentally right to make an exception of this kind.
Re: state taxes on food. That's generally a sales tax, which is a different concept than what I had in mind. I thought you were literally suggesting reforming federal income tax, such that instead of listing "gross income", and then (after a few deductions) getting taxed on that, one instead computes "net income", which is payroll minus stuff you bought during the year. And you only get taxed on net income.
(Of course, that would seem to encourage no savings, and reward excess consumption, but that seems to be where you're heading.)
Well said. I agree completely.
I think the conflict comes down to, how significant is it, whether your net contributions to society are positive or negative? Over months and years, or your lifetime, do you contribute more to society than you take, or vis versa?
Or does this line not even matter? One could argue that compassion suggests that all humans be treated with dignity, even if they suck resources from the collective.
But it is certainly true that a richer society is one that has individuals taking care of themselves, and in addition contributing above and beyond that to enrich the society as a whole.
The problem is always that the exploited group is not the one with political power and who of the ones with power give a rat's ass.
"As to the narrow question of deducting credit card interest, one problem is: how do you know that the use of the credit card borrowing was the lifeline scenario you have in mind, rather than just buying a big-screen TV to watch the Superbowl? How do you distinguish those cases? "
Regarding the above comment: You mean like how the the tax deductions of businesses are scrutinized as to being necessary or frivolous?...or when deducting the mortgage interest on the McMansion, whether it would be questioned if a house of that size was necessary?
Anyway, the benefit -- if any -- comes from converting renters into owners. I agree with both of you, that there really isn't any benefit to subsidizing a small-home owner into becoming a large-home owner.
One might even argue that such a policy exacerbated the recent housing bubble...
Organian, thanks for mentioning payday loans. They're a sort of worst case of this and I don't understand why they're not illegal. I understand the theory probably is summed up in words like "free market" and "voluntary choice" but the government inhibits us from doing other things we might like to do out of choice because it regards them as inhumane; I don't know why this isn't one of them or why those aren't all uniformly allowed.
Lairderg, I'm “glad” (sigh) to hear someone mention the issue of difficulty of applying for cards at these bad times. It's both useful and sad to hear confirmation of my personal experience and my belief about others—that one can get to this situation where banks are not going to approve a loan, or where one believes that with sufficient strength that one doesn't try because one can't emotionally bear the humiliation of going to the bank just to be told they are (a) worthless and (b) without any reason to trust them that they might have worth in the future.
lorelei, regarding usury, I hope you saw my Round Up the Usury Suspects. Also, of course, there's Kevin Phillips’ American Theocracy, which is badly titled because it deals equally with three topics: theocracy, oil (particularly “peak oil”), and debt; it's a frighteningly stark read. I assume his more recent title, Bad Money is also good, though I've not had time to check it out so can't (yet) personally recommend it.
Catamite, thanks for the supportive words. Glad you enjoyed it.
Roy, on self-reliance, I hope you saw my “Whatever Should Be, Should Be” which treated that issue more directly, which treated that issue already sufficiently that I'm not going to worry I need to re-defend it here, though I'm certainly happy that you raised it! And I agree that civilized debate is good. I had been hoping we'd get some of the alternate points of view commenting, which requires some bravery given the culture assembled. I don't think we get to the issues without a pretty frank discussion.
And what standard of measurement determines the balance of positive and negative? If it's a strictly monetary accounting, then it eliminates virtually everything that holds enduring value in the judgment of history. Artists, writers, inventors, spiritual teachers, visionary political leaders are those whose contributions matter in the long run.
Maybe the best idea is to find a way to support everyone, and if a few freeloaders take more than they've earned, big deal. It'll more than made up for by the creative and productive efforts of those who are freed to give the best they have. Any way, I'd venture to say you'll find a hell of lot more freeloaders on the boards of corporations than on the factory floors
You raise a point worthy of several entire posts...
Kent,
I rated this, and may return to comment after I think about it a little more. I'm not sure I have much to add here, though.
So Communism (or maybe Marxism) is the basic idea that everyone should take what they need, and contribute what they can. And it works well in small human groups (like individual families).
But the reason it fails in large organizations (or at a nation level) is more complex, and has a bit to do with human psychology. Roughly speaking, if you disconnect effort from rewards, you'll find that a whole lot of people stop exerting effort. Sure, a few special people remain self-motivated, and produce wealth just because they enjoy the process. But the typical person loses motivation to work hard.
And so the society as a whole winds up with vastly less wealth than they expected. At the extreme, very few people are still "doing their best".
(The short form would be that I think you're used to arguing against pre-packaged forms of this and you're not letting your mind go free to really brainstorm this. The space of options is really rich with opportunities for hybrids, and I invoke Clarke's First Law here in saying don't be so quick to assume it's impossible to do better. Note that even the original design of our country is not a simple democracy, but one that is balanced by a Bill of Rights, balancing the power of the majority against the rights of the individual. Why should our economic system not have a similar compromise, seeking the middle as well?)
In my opinion, though, we're still drifting on the issue of interest deductibility and double taxation, and while I won't ask you to stop addressing this because it is a useful conversation, I will say I'm in the process of making an alternate post where this conversation can take center stage. I'll get it up as soon as I can. I have the notes of what I wanted to say to you in a comment and just have to turn it into passable text...
This may be too late to enter back into this debate, but I thought quite a bit about your post over the weekend and about my comment and about your response to that comment.
Here's where I think your argument breaks down.
"Government is “a compulsory territorial monopolist of protection and jurisdiction equipped with the power to tax without unanimous consent.” "
Spccifically the phrase "the power to tax without unanimous consent." Because I don't believe that interest rates are without consent. Nor do I consider them a tax.
The terms and conditions of credit are printed on all credit applications. Yes, they are a little confusing and some may need help in understanding them and they should seek such help but no one is without the opportunity to play "what if" while deciding whether a credit card is a good idea for them.
The fine print states that your interest rate will go up to 25% if you're late, or miss a payment or even go above your credit limit. Perhaps the Govt. should mandate that credit issuers make these things more apparent and more clear and I'd be with you on those types of changes but not to make interest deductible.
I really think that the key here is voluntary. One agrees to those taxes when they sign up to participate in the credit card nation.
And further, I don't see how someone who works very hard and sacrifices and defers many wants so as to avoid irresponsible debt should be required to subsidize the taxes of those who choose otherwise.
Additionally, I don't think you're talking about the truly needy here. Poor people can't get credit cards at any interest rate.
Things are not equal and not always fair. Should I get a subsidy because I went to a community college and then a state school and but for available money I could have gone to Harvard and perhaps made a greater income?
I guess I'm old school, if I say it, I do my damnest to do it. If I sign an agreement, I do my best to live up to it. Even the parts I don't like.
This is the land of the free and that's the way I'd like to keep it. But that means that even the greedy, the mean, and the uncaring get to be free too.
I apologize for the length of this I tried to be brief and therefore may not have been as clear as I'd like.
You can make the case that this was a simple failure to understand the wording. I disagree. I think this is a case of “they do it because they can” and no one has changed it because Public Government is providing no serious oversight. They just don't care enough about the “little people.” Moreover, from a tangle of other implications, there are other ways people can get into trouble. But the main thing is that it's like ARM's where at the time you sign up, the consequences seem small, but when you get into trouble, you have no recourse. So why allow people into this snare if you claim it's so avoidable?
You probably think it's all the same if people refrain or the government denies it, and perhaps you think it's a denial of freedom to do the latter; but I think the other way around, that as long as it's a permitted behavior, government doesn't see the set of financial woes that the availability of this system papers over by putting people into massive debt. If the government denied the right to get such cards, there would be an instant outcry of “then how will I get out of thus-and-so situation” and it would be immediately more obvious how many people depend on these situations you appear to be blind to. It would, in effect, force the issue...
By delaying when the issue is discovered, you delay it to a time when no one it happens to has time to complain. They are under the gun and have to make an immediate crisis decision. Much better to require them to make that decision earlier, to require banks to take any amount they approve as not too much unsecured credit. Even just canceling a credit line that people thought they had, which is rampant right now, I hear, is a major problem for consumers who may have taken actions that assumed they would have this safety net.
So, well-meaning as it may be, I don't buy any of what you're saying, but not because it lacks logic, rather it lacks breadth of understanding of the scope of the situation and it trusts the interpretation of that credit agreement that you think you understand way too much.
So, I might be wrong but it's not from a perspective of not understanding how the issues you describe can effect a family
To answer your question, Kent, in my eyes it's called freedom. We have the freedom to use and have credit cards if we choose. They're bad...BAD. We need to teach this in our schools and elsewhere and really adopt a national mindset of budgets and living within one's means.
We have slipped into a form of fascism where all the laws of the land are skewed to not only protect but to give unfair advantage to corporations and the wealthy. I agree wholeheartedly that these laws ought to be changed but I'm not holding my breath. To solve the problem NOW for any specific individual the only alternative is to stop.
We American' have become weak and whiny. We think we must all buy whatever we see. We spend without regard to need or means. We then expect the Govt. to come along and solve the problems that we've created for ourselves. But with this help comes regulation. I want my freedom and I'm willing to work to keep it. I want the Govt. out of my business.
In the longer term the solution is the same. We simply have to stop. Stop the fanatic consumerism. Stop, the notion that more is better. Stop, keeping up with the Jones'. IT IS SIMPLY UNSUSTAINABLE!!!
A number of these things have happened to me, you see. And so I take some of your remarks very personally. And yet there are these sweeping generalizations you make about people not reading agreements or not taking responsibility for their actions or about being whiney or about spending beyond their means—I don't think any of those apply to my situation. I did my best to take responsibility for my debt even where it was ridiculous and excessive and the result of bad law and predatory lending, and I did my level best to just pay it rather than evade it, even when bankruptcy would have been easier, and even when repeatedly confronted by credit card policies and laws that were just stunningly arbitrary and unfair. Rather than fight these, I endured them exactly so that no one might say, as you have hinted, that my only reason for being upset was that I was a whiner who wanted out of some responsibility that had been voluntarily entered into. But having done that, I claim the moral right to say clearly that what happened to me must not happen to someone else. It may be self-serving to say it shouldn't happen to me, and so I have never said it. But I hope it is not then self-serving to defend others from a point of view of having been there and properly relating.
Note that I am trying very hard not to speak of the specific fact pattern of myself for several reasons. One is that I don't particularly care to open my personal history for scrutiny. It was a very painful time in my past and I don't want to revisit it. Another is that if it were about my fact pattern, someone would find some detail that was not relevant and then dismiss it on that basis as if it were a proof that no similar situation could happen to others, which I think would be false. And finally I don't want this to be exactly what you're suggesting when you say we're becoming “weak and whiny.” I'm not asking anyone to solve my problem. How I did/do/will deal with the problems I encountered are my business, not someone else's. I'm interested in making sure the indignities that I've seen, and they were legion, do not strike others.
Also, at great personal emotional cost, I did struggle to reveal just a little bit of what happened to me in one of the early scenarios on this thread. I don't think you can understand how hard that is to do. And so when you don't even respond on point, I feel like I've opened myself in a way that is very vulnerable and then to no purpose. It makes me not want to share further because the details will either be overlooked or trivialized. And I mention this all so that you know that there are reasons there is no data on this. People find it hard to talk about these situations. But that doesn't make them not be present. It means people just hate talking about things that don't show them in a flattering light. Rapists have capitalized on this fact for years. And I daresay that with a bit of work, I could make an analogy between certain credit card companies and rape. But I'm not up to it just this moment, so I'll decline.
It may not be what you intend, but I read your remarks as endorsing some kind of bogus “freedom” to get hurt this way, all the while telling people it's their own fault if they don't just avoid ever using the freedom you're encouraging be left in place. It think that's shameful.
You apparently don't like some wording I quoted out of Wikipedia in order to establish a metaphor. Fine. You've made your point. I've made mine. Others reading along can judge. I happen to think your remarks are also off-topic because they don't treat the question of whether the taxation (the failure to allow a deduction) is unfair. I always tell my daughter not to make “objections” unless resolving the objection will change the course of the conversation. Yu're nitpicking my metaphor by attacking wording I quoted from another text and saying it doesn't apply here, but even if I granted that you were right (and it happens that I won't), it wouldn't change the bottom line fact that the taxation presently in place is both unjust and likely to make a bad situation worse.
The article specifically does not try to address how people get into this state, and it specifically does not try to address whether it's good or bad that they did. It does try to address whether it's good or bad that we tax them as if they had money available while they're trying to pay back such debt. I claim it's bad to tax them on the interest because if you don't take into account what they are paying in interest (no matter how that interest obligation was entered into) then you aren't being realistic about what they can bear. And taxes, however onerous you or anyone may think them, are intended to be realistic about what people can bear. Otherwise they'd be a flat dollar amount instead of a percentage base and we'd lock people up for not making enough money to be able to afford to pay taxes. The whole notion is that a percentage of income means they will have the money available. But if they are mired in credit card debt, they may simply not have it. And that needs repair.
Yes, I am sure someone will send me a new one on a silver plater and a neck rub by a lobbyist!
Congressman Tom Tancredo obviously doesn’t know (or care?) about the predatory dealings of financial institutions such as Bank of America. I vowed never to have Bank of America as my bank again after a short stint with them back in the 80s … ( you can see more at my blog)
I am extremely frustrated at the control these institutions have imposed on me, my family and our liberty, and frankly the citizens around me. I went into a Bank of America branch recently here in Vallejo and watched as the customers came in. Many of them looked pained and wounded as if they were going before a tribunal to account for their sins as “what is this charge for?” echoed through the lobby. Bank of America knows exactly how much can be made by making it difficult to track down charges that are incoherent to the average citizen. I believe Bank of America, this company that wraps its image with the symbol of US patriotism, is the darkest stain of evil on our freedom and integrity.
I am neither rich nor excessively educated but I do have a fair amount of life experience and what I see is an excess of reliability on people who claim to be authorities on subjective matters, people who can measure devoutness, loyalty, patriotism, marketing, the stock market, and even credit default swaps. These are the people we follow, and when they prove to be to be false profits, or more accurately greedy liars, they rely on our sympathies to bail them out. These greed mongers seem to believe they have a claim on our human sensitivities. We are the chumps. Remember the recent Bank of America campaign “keep the change?” Well, now I understand the term “chump change.”
If Thomas Jefferson were here today giving us a speech, standing before us… speaking his objections to Hamiltonian motivations we could replace our first treasurer’s name in that speech with “AIG,” or “B of A,” or “corporate executives” and his message would still be applicable today. I’ve recently read a bit about the formation of America and our fiscal structure. The similarities from then to now are uncanny. I’m quite sure the more centrist, more liberal, or better educated of us could see and affirm Jefferson’s position. Hamilton, with Washington’s compromise, led us down this path and it’s been the same issues rippling through time. Exposing the greed without sanctions or regulations only allows them to slip back into the cracks to pop up elsewhere at another time. This time the greed is so apparent --yet some of the more loyal are adjusting their blinders… waiting for the time their loyalties will pay off. They don’t know it’ll be a long wait and they don’t care --their loyalty in a large part is their motivation. The “experts of subjective matters,” the people that control and hold our worldly assets, will keep brainwashing them that “money is evil and loyalty is divine!”
There must be more regulation. Why am I always being enrolled in some credit card sponsored insurance? How is it I get these free gifts, and they are added to my credit card bill three months later? Why is it they are able to adjust their rates and their penalty charges whenever they want… especially when they need a couple hundred million more in bonuses.
I am not naïve to believe this is an easily fixable problem, but I do believe it is my duty as a citizen to complain. Why must we, the middle-class majority, be the ones put in the box with no other escape, but to feed and service the greedy?