Why I Support Refund Anticipation Loans without Reservation

by JT McGee


So the whole world is flipped upside-down a la Will Smith in Fresh Prince about what is supposedly a questionable business model.

The business model in question is a product of H&R Block, Jackson Hewitt, and their little friend—the refund anticipation banker.

What’s a RAL?

What’s a refund anticipation loan, you ask? Pfft, only about the most profitable loan in the history of man-kind.

Basically the tax compliance companies allow their customers to receive a loan as an advance against a future tax refund. In return for a flat-rate fee, a bank writes a check to the tax filer in the amount of the expected refund from the US Treasury. The fee? $100. The advantage? Oh, you get your refund today instead of a week from now as you would with an ordinary e-file and bank wire c-c-c-combo.

Some say this business model is predatory. It is. They charge $100 for a loan on $2,150 for a period of exactly one week. And you know what? Good. I don’t have a single problem with it!

But what about the children!

Refund anticipation programs belong up there with in-store extended warranties and bumper-to-bumper warranties peddled by hair gel clad used car salesmen—they suck. It is true, the people who accept these loans get ripped off.

You know why I don’t care? Because stupid taxes are a good thing.

Plenty of people consider the lottery to be a horrible investment, a true stupid tax. Since there is no possibility of an expected positive return, the average lottery player will, on average, “win” far less than they “lose.” Thus, the lottery is a stupid tax.

In my view, it’s actually a smart tax. Not only is it levied on only those who agree voluntarily to play the lotto, it affords excellent public services. Here in Indiana it was used to cover a massive gap in the state budget. Win-win!

These refund anticipation loans are a win-win, as well. See, for each dimwit dumb enough to pay a $100 flat fee for a $2000 advance, I pay less to file my taxes. But it’s not just me, many millions of people are going to file their taxes this year at rates practically subsidized by financial irresponsibility and recklessness—I’m cool with that.

I Can Protect Myself from Myself Just Fine, Thanks

This “whole protecting the public” thing is the reason I pay indirectly a pharmacist to count to 30 and a doctor a hundred dollars to give me a sample of his poorest quality penmanship.

It’s the reason why lighters give me blisters, and I have to show my ID to buy white-out at Wal-Mart.
I bend over backwards every day, of every month, of every year for stupid laws, policies, and “protections” intended to keep me safe from myself.

If I ever want to borrow money at an effective APR of 160% per year…well, then I damn well better have the right to do so.

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