An Open Letter to the 2008 Presidential Candidates

To: Obama, Clinton, Huckabee, Giuliani, Edwards, Romney, and all the other candidates. For the last several presidential elections I have wondered something. Now, I’m going to ask:

Every presidential election cycle those of you running for office talk about tax relief. You talk about improving the living standards of Americans. And so it is again this year. I’ve listened to all of you as you talk about “taxing the rich” more so you can lower taxes on those in the lower income brackets. I’ve heard the discussions about how each of you is going to bring health care “to all Americans”. Some of you have plans to completely revamp the tax code, others the health care industry.

But one thing I have never heard a presidential candidate discuss: Lowering the corporate “taxes” on low income Americans. Perhaps it’s because you do not know; perhaps it’s because of the amount of money corporations give  your campaigns; perhaps its the power they wield in Washington and in the State Legislatures of the Union.

I don’t know. I do know that these corporate “taxes” cost poor Americans more than they pay in income tax. In fact, at the moment the American’s hurt the worst by these corporate “taxes” pay no income tax at all. Your tax relief programs simply do not affect them.

Why do I call them “taxes?” Because, Presidential Candidate, that’s exactly what they are. Just like the income tax, they have been approved by Congress and were signed into law by the President. Just like the tax code, regulations have been promulgated on these “taxes” that define the amounts that can be charged. And just like State taxes, by its  silence Congress gives its tacit permission for corporations to “tax” as surely as it does the States of the Union.

So, dear Presidential Candidate, it is a tax as surely as any other. It is simply a private tax.

So, what corporate taxes am I talking about?

• The Cash Tax. Did you know, Presidential Candidate, that some corporations actually charge a fee if a customer is so crass as to pay their bill in hard currency — the good ol’ American Greenback? It’s usually a fee of  around $5. Not much you say? Tell that to the young mother who could have used that $5 to buy her baby some formula!
• The Late Payment Tax. Not only are corporations allowed to charge interest on past due balances, nearly all also charge a “late fee” that can be anything from a dollar or so all the way up to $20 or more. It’s a regular cash cow for the company. And who is the cash cow? Not the middle class, who have money to budget and a savings account and probably an IRA. It’s the poor who have none of those things, who are continually juggling bills and counting pennies to feed their children. Even State governments tax the poor in this way, charging an extra 1%-2.4% of the cost of vehicle registration. They also charge interest on late income tax payments — as does the IRS.
• The Money Order Tax. Some companies don’t accept hard currency for payments on account at all. Did you know that, Presidential Candidate? And many poor Americans don’t have checking accounts. In order to pay their bills they have to purchase money orders for an average of $1 a piece. Tell me, Presidential Candidate: Have you ever stood in line behind a poor American dropping a precious $10 or $20 bill (which might be as much as 10% of all their money) on a string of money orders to pay their monthly bills? It hurts just to watch!
• The Car Tax. What’s the average miles per gallon (mpg) for cars on America’s roads today, Presidential Candidate? According to the National Highway Traffic Safety Administration (NHTSA) it was almost 25 mpg in 2004. Do you think the poor, who drive the oldest, poorest maintained, least efficient vehicles on the road today get that kind of mileage? Not hardly. They can’t afford a new hybrid. They drive cars 20+ years old that get 10-20 mpg! How many bottles of baby formula or trips to the doctor for the young ones do you suppose that 10 mpg difference could pay for at $3/gallon for gasoline?
• The Bank Tax: Those in the low income brackets who try to avoid the horrendous Money Order Tax often find they’ve taken a far more dangerous road when they run into what The Wall Street Journal labeled “The Shell Game,” (In a Your Money Matters Podcast. [Listen to it: (MP3 Download)].) NetBanker.com columnist  Jim Bruene was a little more polite when he referred to the practice as the “creative engineering of transaction-processing algorithms” that generate the maximum possible number of fees possible when an account holder overdraws their account.

  It works something like this: At the end of the day transactions pending against a customer’s account are ordered from largest to smallest. In this way the account is over-drawn in as few transactions as possible, thus letting the bank charge the maximum number of over-draft fees. Also, if a pending debit card transaction takes “the available balance” into the negative, they’ll charge another overdraft fee, even though the account may never actually go negative. (For example: If a customer rents a car, the rental company might put a temporary hold [pending transaction] on the renter’s debit card for $150, thus overdrawing “the available balance.” The bank will then charge the customer an over-draft fee for that $150 “pending” transaction and every other “pending” transaction of a smaller amount, even though the rental company withdraws the $150 hold when the car is returned without incident; the money is never actually withdrawn from the account, so the never really becomes overdrawn.)

  Banks have become so aggressive with “The Shell Game” that it has now drifted “up the food chain” to people with enough money and education to fight back, as Jim Bruene’s article, Blogs Bring Negative Publicity to Overdraft Charges, demonstrates.

It is truly dismaying that it takes a the kind of press a lawyer with a minor in accounting can to bring bear to expose  these predatory practices on the poor. For certainly it is not the middle class that is hurt most by “The Shell Game”, or The Money Order Tax, or The Cash Tax. or The Late Payment Tax. Rather, it is those who have the most to lose. Those that can see an entire two weeks worth of income disappear because they were forced to make the horrible choice of either losing their electricity (and so having to pay three times the past due balance to have them restored), or attempting to float a check for a few days, till they receive their next paycheck.

The question is: What will you, Mr. or Mrs. Presidential Candidate, do about it? Will you remain silent, leaving intact these heinous drains on the meager incomes of those who already have nothing? Or will you step up to the plate and make this the flag-ship issue for your domestic tax policy?

America’s voting poor want to know! ?