Bingo, Taxes and Title Loans

It’s time to wade into Alabama politics.  Just a little.

I’ve been advised to “try to get to like us first” before starting to follow state politics.  This advice came from a person who would like us to stay in the state.

Knowing that I now live in a state that elected Jeff Sessions to the U.S. Senate, I’ve tried to follow that advice.  I do know that elections — primaries, I suppose — are coming up, because lawns have sprouted signs in addition to weeds.

If Young Boozer wins the Republican primary for the post of state treasure, I have to admit I’m tempted to vote for him, if only because of his name.  If he loses the primary, I will most likely vote for the Democrat, regardless of his name.  Because the name of the other Republican is enough to almost keep me from voting entirely:  George Wallace, Jr.  Yes, the son of that George Wallace.

But electoral politics isn’t what’s leading the news these days.  No, the hot fight is over bingo.  From what I can gather, bingo is the word used in Alabama to describe what is known in every other part of the United States as slot machines.  The governor believes bingo violates state law, and ordered the casinos in which the machines operate to be shut down.  But the attorney general is on the side of the casino operators.

It’s hard to escape the Bingo Wars if you have TV.  Actually, we don’t have TV (see previous post), but we still get to witness some of the warfare by way of billboard attacks.  As near as I can tell, the governor and his allies are in the pockets of evil Mississippi gambling interests who want to maintain their regional monopoly.  The pro-bingo forces are the front of shady looking gangsters who smoke cigars in poorly lighted rooms.  There must be an element of morality somewhere, too — after all, slot machines, even when called bingo, are a form of gambling–but I haven’t seen it emerge as a dominant theme.

In fact, Alabama doesn’t seem to be bothered too much by the moral aspects of state financing.  The highest marginal rate on the state income tax is 5%, and your federal taxes are deductible.  Our property taxes are among the lowest in the nation, and, as our mortgage broker noted, “we have the schools to prove it.”  So, the tax system doesn’t impose a heavy burden on people who make a lot of money or can afford to buy a big expensive house.

But woe be to you if you need to buy stuff like food and clothing.  Here in Montgomery, the combined state and local sales tax is — get ready — 10%.  That’s higher than New York’s sales tax (8.5%).  And, to add regressive insult to regressive injury, the tax is levied on everything, including groceries.

I hear there’s a law under consideration in the legislature to finally repeal the tax on food, but it has been introduced before and failed.  In the Commerce Cafeteria at lunch last week, I overheard two suited men — lawyers, legislators or some kind of high-level state officials, I would guess from their appearance — denouncing the foolishness of this effort. “And it looks like they might get rid of the sales tax this time,” one said in a voice filled with chagrin, “Well, how do they think they’re going to make up that revenoo?”

But it’s OK, because poor folks have ready access to easy money: Title Loans.  There are more Title Loan offices here than there are pawn shops in Las Vegas, I am certain.  I wasn’t exactly sure what a title loan was, although judging from the locations of these places, I was pretty sure it was basically a legal form of loan-sharking.  The storefronts look a lot like those check-cashing places you see in lower-income neighborhoods in New York.  Both business make their fortunes off the “unbanked.”

Today I saw a title loan place advertising — on a huge banner — its interest rate: 9.9%.  Got that?  Nearly ten percent when CDs are paying less than 2%; when you can get a mortgage for less than 5.5% (well, if you can find a bank willing to make the loan).  This drove me to Google, where I found out more about the business model under which these places operate: you borrow against your car.  Apparently, all you need to do is bring in the title to your car, and you too can be paying ten cents on the dollar for a loan.  Can’t pay?  Well, they’re a step up from loan sharks, I guess.  They just take your car.  I’m thinking Repo Men.

So, let’s get this straight:  You’re a member of the working poor — maybe you have a job at a casino.  You live in a city without much public transportation, so you depend on your car.  If you work in a casino, you REALLY need a car, because they’re all in the middle of nowhere.  You live paycheck to paycheck, which means that you spend 100% of your income.  And the sales tax is 10%, so essentially it knocks your purchasing power down by 10%.  (Folks who make more money tend to save some portion, and another chunk of their spending is discretionary, so the 10% sales tax doesn’t hit them proportionately).  And then the governor shuts down the casinos, you’re out of a job at least temporarily, and the day comes when the rent is due.  So you dig out the title to the car and borrow some money …

Unlike members of the Tea Party, I believe in taxes. As Oliver Wendell Holmes famously said, “They’re the price we pay for civilized society.” But not these kinds of tax policies.  What ever happened to progressive taxation, based on the ability to pay?  Gone, I guess, with the progressives.

I also believe in banks, and wish they’d work harder to revive the spirit of thrift — can you imagine if banks spent as much money on direct mail promoting savings accounts as they do pushing credit card offers?

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3 Responses

  1. An eye opener for me.

  2. I remember being horrified by tax on milk when we lived in VA. I’ll have to ask Kathleen if all food is taxed there. Another tax which I found bizarre was the personal property tax; evidently, no one in the state of Virginia owned a watch (because no one ever paid tax on them) but all sorts of other personal property were subject to additionaly taxes.
    As far as politics go, AL may be a close second to NJ because we seem to be living through an alien invasion with the rhetoric from our recently elected governor. Actually, its not aliens everyone has to fear, its public school teachers!

  3. When we lived in NC (’79-’82), we paid a renter’s tax an personal property tax. We owned a stereo and a bike. My husband was a student and I was a waitress at a waffle shop. I think we paid it out of my tip jar. I’m pretty sure unions are still illegal there…

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