News European Court Ruling on UK Taxation Laws

[bobc2]

When people get upset about well-to-do people not paying their "fair share" -- aside from missing the obvious fact that they carry the vast majority of the tax burden, they miss the whole point of the role of high income in a Capitalistic Free Enterprize System.

People have an emotional reaction to the big houses, fancy cars, and other material perks of the wealthy. That stuff is peanuts. If you took all of that stuff away and redistributed the proceeds from the sales, it would be just a drop in the bucket toward satisfying the goals of progressive tax proponents.

The real money is that which they invest. The major point missed is that the wealth of the well-to-do is a key cog in the engine of our econmony--including job creation. The vast majority of the assets of the well-to-do are actually already "donated" -- given to others. Even when they get interest back on their wealth allocations, they just give it away again (keeping just a small percentage for personal perks).

They aren't putting their money in a mattress. They are literally giving it to others who start up new companies, expand existing companies, build hospitals, fund municiple projects, build libraries, provide capital for construction companies so they have the front-end capital to take on construction of buildings, bridges, highways, etc.

And their money is also provided to funds from which lower income people borrow to buy cars and houses. And it's done much more efficiently than the government mode of redistribution of income.

That's what Capitalism and Free Enterprize is all about. Now, the proponents of high corporate taxes as well as excessive personal income taxes for the wealthy would unwittingly induce the unintended consequences of choking of this whole process (some progressives, socialsts and Marxists would choke intentionally). This is the process by which this country developed its technology and high standard of life over generations. Socialist countries actually benefitted from the creativity that evolved naturally in the Free Enterprize environment of the U.S. The U.S. Capitalists put up the seed Capital. Sure, Canada may have low cost medicine, reaping the fruits of R&D investment capital in the U.S.

If the government would get out of the way and quit the ever increasing confiscation of wealth, we could continue on an established path of success and excellence. The government's redistribution of wealth is no where near as successful in resolving the problems of the poor as the the wealthy are by investing the vast majority of their wealth in projects leading to job creation.

And the thousands of investors of discretionary money make far better decisions about where money should be directed as compared to government beauracracy. People like Bill Gates manage their money much better--to take away another couple of billion of his wealth is to simply penalize all of those who would have benefitted. And if you don't like Bill's allocation of his wealth, at least there are many many more institutions taking varieties of approaches. Free Enterprize takes the best of the myriad of approches and sustains the ones that work.

God bless the rich, the entrepreneurs, and the innovators. May liberals, progressives, socialists, and Marxists be unsuccessful in their attempts to hijack the process.

 

[turbo]

The payday loan stores and pawn shops typically target people living paycheck to paycheck.

Have you ever been to cities that are dominated by military facilities? If so, you will know that that these business are established to suck money out of out of our military personnel. You will also see (in the deep south, especially, IME) a preponderance of "title-pawn" companies that are set up to steal the assets of people who might have to ditch things of value to provide for their families before they are deployed overseas. There is a whole industry built around exploiting the members of our armed services. Do you not know this?

 

[Al68]

You will also see (in the deep south, especially, IME) a preponderance of "title-pawn" companies that are set up to steal the assets of people who might have to ditch things of value to provide for their families before they are deployed overseas. There is a whole industry built around exploiting the members of our armed services. Do you not know this?

Can you substantiate your assertion that a preponderance of "title-pawn" companies are set up to steal assets of people? Should be easy, since you're so shocked that someone could "not know" that.

 

[WhoWee]

Have you ever been to cities that are dominated by military facilities? If so, you will know that that these business are established to suck money out of out of our military personnel. You will also see (in the deep south, especially, IME) a preponderance of "title-pawn" companies that are set up to steal the assets of people who might have to ditch things of value to provide for their families before they are deployed overseas. There is a whole industry built around exploiting the members of our armed services. Do you not know this?

Are they not also living paycheck to paycheck - as I indicated?

The (nationwide) business model is not designed specifically to prey on military personnel - they are thriving in non-military areas. However, I am aware of the activities you've described.

 

[WhoWee]

I am aware of the activities you've described.

The paycheck loans and pawn shops are 2 completely different business models. While both are banking alteratives, they are regulated differently.

The paycheck shops typically advance funds (either at a discount or for a fee) against a verifiable income stream or a single check. These shops routinely offer bill pay services, discount money orders, and possibly pre-paid cards.

The pawn shops are typically regulated on a municipal level and monitored closely by law enforcement. The pawn shop normally offers 2 options 1.) loan against an asset, or 2.) purchase the asset. When a loan is desired, they asset must be valued (gold is weighed, diamonds verified, computers, electronics, tools, bicycles, sporting equipment (items without titles) are compared to free market trading prices. This process can be time conssuming and has potential risk. Pawn shops want repe3 business on the exact same items and try to loan smaller amounts (weekly or monthly) on the items. Fees include the state mandated interest rate plus transaction fees - a $10 loan on a $150 watch might cost $13.50 to reclaim. If the item goes unclaimed (varies by area) 6 months - the shop is permitted to follow an approved protocol to sell the items - typically via auction.

When a pawn shop purchases an asset in the initial transaction (rules vary by location) they typically offer more than they would for a loan - perhaps 3 to 4 times as much. However, it is common practice for local rules to stipulate the items be held for a specific time (and items reviewed by law enforcement) before being resold.

Assets with a title (cars, motorcycles, boats, and airplanes) may require additional licenses.

 

[turbo]

Can you substantiate your assertion that a preponderance of "title-pawn" companies are set up to steal assets of people? Should be easy, since you're so shocked that someone could "not know" that.

I have not seen a single title-pawn establishment that is not near a military base, and didn't know that such establishments even existed until I saw an array of signs near a military base and asked my project manager (ex-Navy) about them.

That doesn't mean that they don't exist in areas away from military bases, and they probably do, but they are very heavily concentrated around large bases. They are perfectly situated to confiscate assets on the titles that they hold when military personnel are transferred or deployed on short notice, and don't have the time or resources to repay the pawn and recover their titles. Judging from the concentration of title-pawn shops near some large bases, it must be a very profitable business-model. They are VERY prevalent in Georgia, which allows them to charge up to 300% APR.

http://www.georgiawatch.org/2009/05/20/title-pawn-loans/#more-207

 

[mheslep]

The recent restrictions placed on lenders by the Financial Reform Act last July have made credit cards more difficult to obtain, http://chicagobreakingbusiness.com/2010/08/credit-card-rates-hit-highest-level-in-9-years.html", and are of course partly responsible for the increasing use of pay day and pawn shop credit as the logical next step to supply demand. Make no mistake, the US government has made this happen. Next maybe we'll see the cries of "exploitation" about them also leading to similar restrictions, to likewise "protect the consumer", bringing back the days of the loan shark and their %1000APR and more interesting collection methods.

 

[WhoWee]

Judging from the concentration of title-pawn shops near some large bases, it must be a very profitable business-model. They are VERY prevalent in Georgia, which allows them to charge up to 300% APR.

In the 1990's, I managed a consulting project analyzing the potential for, and logistics of, consolidation in the pawn industry. My clients were looking for a franchise vehicle and needed a comprehensive evaluation for their business plan. At the time, we determined that well established pawn shops were very successful. The model was more complicated than just loaning money (most small shops kept a minimum of $250,000 on the street) - and turned it every 10 to 20 days.. The business model also included purchasing "scrap" jewelry. There is no such thing as "new" gold or diamonds (newly mined yes- new no). For example, a pawn shop might purchase a worn gold ring with a diamond setting. They purchase based on a slight discount of the current wholesale scrap rate (2 to 10 percent) and remove the diamond. The gold is accumulated and sold to a smelter/re-manufacturer of (new) jewelry. The diamonds are sorted and made available to the diamond market - or placed in "new" pieces and sold as new - by everyone from discounters to the finest shops. The retail mark-up (mall) is about 1,000 percent.

The title-pawns were relatively new in the 90's. The most successful were in FL - where the APR was about 360 percent - NY by comparison only about 30 percent plus roughly 10 percent handling charge at time of initial transaction.

The low end title-pawn model was in direct competition with small car dealers. The high end/exotic cars, boats, airplanes were very lucrative.

 

[Vanadium 50]

The argument that "I see payday loans near military bases, and therefore there is a correlation" is exactly the same argument Halton Arp makes about quasars being near local galaxies. With exactly the same problems.

Indeed, at least some companies are leaving that market.

For example, during 2006, the United States Congress enacted legislation that capped the annual percentage rate charged on short-term/payday advance loans made to active military personnel at 36%; this legislation became effective in October 2007. The Company does not have, nor does it intend to develop, any short-term/payday loan or credit services products bearing an effective interest and fee rate of 36% per annum or less, as the Company believes the losses and servicing costs associated with lending to the Company’s traditional customer base would exceed the revenue produced at that rate. As a result, the Company does not have a loan product to offer active military personnel.

This is actually a sore point, as military families who used to rely on payday loans are now "relying" on overdraft fees. This is even more financially burdensome. Despite what seems to be the view of these regulators, people are not stupid. They are selecting the least bad of a number of bad options. When that one is removed for them, they have to move to one that is worse.


I looked at Advance America's 10-K (you know, I am surprised at how few people look at them. People talk about how much corporations 'must be making' and the information is right there to be had on the internet. Last year, their average fee was $55 on a $339 loan. Their average profit (a different thing than mark-up) per loan was $5. So if they are regulated to charging smaller fees by 9%, they can no longer make money and will either leave the market (see aove) or go bankrupt. One reason these loans are risky is that they have a default rate of over 4%.

 

[turbo]

The argument that "I see payday loans near military bases, and therefore there is a correlation" is exactly the same argument Halton Arp makes about quasars being near local galaxies. With exactly the same problems.

There is a BIG difference. When high-interest loan business ring practically every military base, it's hard to argue "chance projection". The military recognizes this as a problem and warns service-people and veterans about avoiding them.

http://www.fortbraggmwr.com/acs/privorgs/Solicitation%20Information%20for%20Website/Military%20Scams.pdf

 

[mheslep]

There is a BIG difference. When high-interest loan business ring practically every military base, it's hard to argue "chance projection". The military recognizes this as a problem and warns service-people and veterans about avoiding them.

http://www.fortbraggmwr.com/acs/privorgs/Solicitation%20Information%20for%20Website/Military%20Scams.pdf

The problem is a government that makes these lendors the last resort.

 

[Vanadium 50]

I am 40 miles from the nearest military base. According to Google Maps, there are 9 payday loan places within 7 miles of me, with the nearest one being 1.3 miles away. There are also 9 payday loan places within 7 miles of the nearest base, with the nearest one being 1.4 miles away.

The same mistake as Halton Arp. If you look only near galaxies, you only find QSO's near galaxies.

 

[turbo]

Just google on "predatory lending" and "military". You'll get so many hits, it will take days to read them. It's a real problem.

(3). Predatory lenders market to the military through their ubiquitous presence
around military installations and/or through the use of terms to affiliate
themselves with the military. Increasingly the Internet is used to promote loans
to Service members.

http://www.defense.gov/pubs/pdfs/report_to_congress_final.pdf

 

[jtbell]

I have not seen a single title-pawn establishment that is not near a military base

Title- and paycheck-loan shops are ubiquitous here in South Carolina, including my small rural city which is 60+ miles from the nearest military base (Fort Jackson outside Columbia). Like most other rural towns in SC, we have a lot of people who live from paycheck to paycheck and sometimes come up short. The local TV stations run lots of commercials for these companies, especially late at night (e.g. the reruns of "Star Trek: The Next Generation" which I automatically record at 2 AM to watch the next day).

[added: Google shows three hits for "payday loan" in my town of 10,000. I walked past two of them yesterday, a block apart, and I remember the other one which is in a different part of town.]

 

[Vanadium 50]

Let's take two similar cities: Junction City, KS, population 45000 (including Fort Riley, which is about 60% of that) and Salina, KS, with a similar population but no military base, located 50 miles west. Junction City has 9 payday loan establishments. Salina has 8.

 

[turbo]

Title- and paycheck-loan shops are ubiquitous here in South Carolina, including my small rural city which is 60+ miles from the nearest military base (Fort Jackson outside Columbia). Like most other rural towns in SC, we have a lot of people who live from paycheck to paycheck and sometimes come up short. The local TV stations run lots of commercials for these companies, especially late at night (e.g. the reruns of "Star Trek: The Next Generation" which I automatically record at 2 AM to watch the next day).

I understand. Maine is extremely rural and poor, and we have no shortage of pawn shops, rent-to-own shops etc. Still, I had never seen a title-pawn shop until I got down south, and found tons of them around military bases. The two documents that I linked above (both from government sources) indicate that the military is concerned about the effects of predatory lending practices on security and military readiness. Not good.

 

[Evo]

Payday loan places are everywhere here, to say that they are more prevalent around military bases is nonsense. They are prevalent where there is a population that needs them. Most times, the fee they ask is much less than the penalties, fees, and time and troble they help to avoid.

Late on rent & won't get paind for a week and a half. You can get a payday loan for $500 for two weeks for a fee of $75. Being 6 days late on rent $250 penalty. Which is cheaper?

Car getting repossessed? Same $75 fee and you keep your car. I have no idea how much it would cost you in penalties to get your car back (if you even can), but I'm sure it's hundreds of dollars.

I understand. Maine is extremely rural and poor, and we have no shortage of pawn shops, rent-to-own shops etc. Still, I had never seen a title-pawn shop until I got down south, and found tons of them around military bases. The two documents that I linked above (both from government sources) indicate that the military is concerned about the effects of predatory lending practices on security and military readiness. Not good.

Sorry, but DUH, do you think the military would be happy that their servicement can't handle their finances?

Title loans and pawn shop commercials fill the late night tv here and we don't have military.

 

[turbo]

Payday loan places are everywhere here, to say that they are more prevalent around military bases is nonsense. They are prevalent where there is a population that needs them. Most times, the fee they ask is much less than the penalties, fees, and time and troble they help to avoid.

Late on rent & won't get paind for a week and a half. You can get a payday loan for $500 for two weeks for a fee of $75. Being 6 days late on rent $250 penalty. Which is cheaper?

Car getting repossessed? Same $75 fee and you keep your car. I have no idea how much it would cost you in penalties to get your car back (if you even can), but I'm sure it's hundreds of dollars.

Sorry, but DUH, do you think the military would be happy that their servicement can't handle their finances?

Title loans and pawn shop commercials fill the late night tv here and we don't have military.

I never said that such businesses don't exist apart from the military bases.

That doesn't mean that they don't exist in areas away from military bases, and they probably do, but they are very heavily concentrated around large bases. They are perfectly situated to confiscate assets on the titles that they hold when military personnel are transferred or deployed on short notice, and don't have the time or resources to repay the pawn and recover their titles. Judging from the concentration of title-pawn shops near some large bases, it must be a very profitable business-model. They are VERY prevalent in Georgia, which allows them to charge up to 300% APR.

It really shocked me to approach the main gates of a large military base, and find the access road lined with such businesses. The guy who managed my training projects for GP is an ex-Navy sub officer, and he explained to me what a title-pawn business was. I never had seen one before. Basically, anything that is paid for and is properly titled can be used for collateral on a loan for a small fraction of the value of the item (generally cars, motorcycles, etc). Naval personnel on boomers are subject to deployment on short notice and for unknown duration, so reliance on such predatory lenders was highly discouraged.

 

[Vanadium 50]

I never said that such businesses don't exist apart from the military bases.

What you said is that the businesses were "established to suck money out of out of our military personnel" and "There is a whole industry built around exploiting the members of our armed services."

Have you ever been to cities that are dominated by military facilities? If so, you will know that that these business are established to suck money out of out of our military personnel. You will also see (in the deep south, especially, IME) a preponderance of "title-pawn" companies that are set up to steal the assets of people who might have to ditch things of value to provide for their families before they are deployed overseas. There is a whole industry built around exploiting the members of our armed services. Do you not know this?

If things are as you say, why are these companies building so many stores away from military bases? Are they just stupid?

 

[turbo]

If things are as you say, why are these companies building so many stores away from military bases? Are they just stupid?

These companies are designed to make profits from poor people. Our military does not pay well, and signing bonuses encourage military personnel to over-extend and get deeply into debt, so these companies cluster around military bases to prey on our service-people. Is this a great mystery? What motivates such nay-saying in the face of so many government studies to the contrary?

My former sub-service-co-worker was very emphatic about the need for active-duty personnel to avoid that crap. Smart guy with several engineering specialties who might have been deployed about any time with NO expectation of return-time.

 

[Evo]

These companies are designed to make profits from poor people.

And as I pointed out they can save poor people a ton of money.

What does any of this have to do with the thread topic?

No more off topic posts, back to thread or closed.

 

[Proton Soup]

turbo, i think you're barking up the wrong tree with the usury services. they prey on the poor and are all over the place in birmingham with no military in sight (closest i know offhand is anniston, and a lot of those are retirees that like buying cheap crap at base stores).

it's just that the military folk are kept artificially poor, and much of this is because for all our capitalist rhetoric, we like to keep a socialist (perhaps commie?) army. what do you suppose the actual going rate would be for a fighter pilot in a truly capitalist system? paid like a CEO maybe?

 

[WhoWee]

And as I pointed out they can save poor people a ton of money.

What does any of this have to do with the thread topic?

No more off topic posts, back to thread or closed.

Care to split into a new thread?

Back on topic, I'm starting to wade through the "green" tax incentives for 2011 - every investment proposal I read feels like the old depreciation-dependent tax shelters. Experience tells me a project must have positive cash flow on it's own - without subsidy, uncertain future funding options, or tax credits - can't find any though. For me, 2011 is about (business model) re-tooling and moving forward - tax planning plays a big part - finding a lot of uncertainty.

 

[Al68]

...it's just that the military folk are kept artificially poor, and much of this is because for all our capitalist rhetoric, we like to keep a socialist (perhaps commie?) army.

I think you're using the word socialist (and commie) rather differently than most. It's socialist for government to use force to restrict or interfere (as a third party) with private transactions, not for government to exercise control over its own transactions, that it is a party to. For military employment, or any government employment, government is a party to the transaction, not an interfering third party.

And (assuming a volunteer force) the terms of the contract are mutually agreed on by all parties to it, which makes it decidedly non-socialist.

 

[Mech_Engineer]

Wow my comment on title and payday loans kicked up a firestorm...

I mentioned it for this reason- only fiscally irresponsible individuals utilize them! The resulting interest rates they charge can be in the range of 1000% APR or higher (even credit cards rarely go above 40%)! Their services are largely aimed at people who are a) already in a bad spot financially and can't afford the consequences of failure to pay, and b) tend to be located in poorer areas. The correlation is there- they prey on people with little to no fiscal responsibility who didn't budget and have an "unexpected" bill come up.

I took a financial planning class with my wife and some friends about a year ago- it was a real eye-opener in terms of how irresponsible people are with their own money (including myself)! The class's teacher put it this way (paraphrased): "If most people were being employed as an accountant to handle their own finances, they would have been fired long ago. Little to no documentation, no future planning, overdrafts, credit cards with outrageous intereste rates... it's a disaster!" This goes into my statement that "poor" people tend to be fiscally irresponsible, while rich people tend to be fiscally responsible; if you save money, live within your means, and don't use credit cards/financing, you end up "rich." It's a miracle!

The "american dream" these days (to my disgust and probably our eventual downfall) is "how much debt can be leveraged with my income" rather than "how much money can I save with my income." People shop for a car based on what the monthly payment will be, rather than the total cost of the vehicle after it's paid off; it's the same with houses. Until you're using 90% of your income to pay for the minimum loan payments on your two cars, house, entertainment system, kitchen appliances, 4 credit cards etc. etc. it doesn't hit you; and once it does your income is stretched so thin you're barely staying afloat. No saved money for an emergency fund, no medical savings. One small hiccup and you're sunk.

The same will happen with the government- we're leveraging debt based on our income, but the bills are starting to take a not insignificant portion of it. Unless we do something about it, the entire country will go into bankruptcy like an individual that overleveraged themselves.

 

[Mech_Engineer]

And as I pointed out they can save poor people a ton of money.

You know what would save them more money? Proper budgeting! If a bill of $300 is a threat- maybe you should ask yourself why you didn't see it coming!

 

[Al68]

I mentioned it for this reason- only fiscally irresponsible individuals utilize them! The resulting interest rates they charge can be in the range of 1000% APR or higher (even credit cards rarely go above 40%)!

They're definitely not cheap, but it's pretty silly to list their fees in terms of "APR", for a loan for just a few days. Very little of that fee is analogous to interest.

Including lender fees in a quoted APR just doesn't make sense when the lender fee is the bulk of the total.

As far as terms like "prey" and "steal", it's a mutually voluntary transaction between adults. The person getting the loan has determined that the transaction is beneficial to him. Nobody else's opinion matters in a free society, unless that person is a child, or treated as a child due to mental disability, or if force or fraud is involved.

 

[WhoWee]

The "american dream" these days (to my disgust and probably our eventual downfall) is "how much debt can be leveraged with my income" rather than "how much money can I save with my income." People shop for a car based on what the monthly payment will be, rather than the total cost of the vehicle after it's paid off; it's the same with houses. Until you're using 90% of your income to pay for the minimum loan payments on your two cars, house, entertainment system, kitchen appliances, 4 credit cards etc. etc. it doesn't hit you; and once it does your income is stretched so thin you're barely staying afloat. No saved money for an emergency fund, no medical savings. One small hiccup and you're sunk.

The same will happen with the government- we're leveraging debt based on our income, but the bills are starting to take a not insignificant portion of it. Unless we do something about it, the entire country will go into bankruptcy like an individual that overleveraged themselves.

IMO - this summarizes our current situation. When the Recession hit, Government revenues fell - the response was to increase spending to record highs. Now, the spending is increased, more borrowing is required, and Government revenues are still lower than previous years.

The only way to cover this gap is to cut spending and raise taxes. The longer the gap widens - the more people tat will ultimately face large tax increases - again IMO.

 

[Mech_Engineer]

They're definitely not cheap, but it's pretty silly to list their fees in terms of "APR", for a loan for just a few days. Very little of that fee is analogous to interest.

Including lender fees in a quoted APR just doesn't make sense when the lender fee is the bulk of the total.

You might be right, but it's a fair comparison if only to show what the fees are compared to a credit card or personal bank loan. Ironically, these loans should be relatively low-risk to the company because they demand collateral for the loan (hence the term, "car title loan") but the net interest rate charged rivals a loan shark...

As far as terms like "prey" and "steal", it's a mutually voluntary transaction between adults. The person getting the loan has determined that the transaction is beneficial to him. Nobody else's opinion matters in a free society, unless that person is a child, or treated as a child due to mental disability, or if force or fraud is involved.

You're right, it's a mutual transaction and you should have the right to do whatever you want. Problem is, it's poor (a.k.a. fiscally irresponsible) people that partake in these transactions, and then wonder why they're poor and want ME to give them money (via government taxes) to help them out. If you want the right to deal in transactions of your choosing, you need to also accept the responsibility of dealing with the consequences of such fiscal policy.

No one gets rich by taking out a car title loan.

The only way to cover this gap is to cut spending and raise taxes. The longer the gap widens - the more people tat will ultimately face large tax increases - again IMO.

You're assuming of course that a tax raise will increase federal income- which IMO isn't proven (in fact it appears to currently be the opposite).

 

[WhoWee]

You're assuming of course that a tax raise will increase federal income- which IMO isn't proven (in fact it appears to currently be the opposite).

I'm in favor of EVERYONE paying a little more IF the spending is cut (everyone take a little less also) - no more EITC either.