Thursday, January 15, 2009

Unmagic

"Jackson-Hewitt: A Partner and a Path"

Earvin "Magic" Johnson, TV Advertisement, January 13, 2009.

I know that basketball heros are as flawed as anyone else. Yet I can't help but attribute an ethical higher ground to players like Bill Russell, John Havlicek, Kareem Abdul-Jabbar, Larry Bird, and Magic Johnson, just to name a few. They were all stars; but they were also committed to teamwork -- that's the ethical thing.

Magic Johnson went beyond good game to invest in inner-city development among other things. I don't know details, but I assume his motives were decent, even though some of these developments didn't work out.

But to stand up for a commercial tax preparer on the eve of tax season is a sad betrayal. The game, of course, is the Earned Income Tax Credit (EITC), a large anti-poverty program of the feds -- $40+ billion each year that rewards working adults with children. There is nothing wrong with getting paid to prepare people's taxes -- although many think we should have free access to federal benefits. Getting your taxes done may cost a couple of hundred bucks; the average EITC is about $1600 -- many families get returns of $4,000 or more. A vibrant, growing free tax preparation campaign is available in most places called VITA -- a partnership of local advocates, nonprofits,banks, local government, and the IRS.

The real problem with Magic's endorsement is that many commercial tax preparers push something call RALs -- rapid anticipation loans -- so that consumers can get their tax refunds immediately rather than wait a few days. RALs are not low cost -- upwards of 3-400% and can take a real bite out of EITC returns -- another couple of hundred dollars. RAL usage has been dropping the last few years because of consumer prodtections, low-cost alternatives, and e-filing, but their usage is still high for people on tight budgets who don't see options.More government regs may be on the way. See recent Forbes article.

Getting your full refund today is even more important for working families who are more stressed by the economy. We need to stand up for free and low-cost options.

Magic, you should have known better

2 comments:

James Horan said...

Bob,

I completely agree. And Magic is doing two commercials, one of which specifically promotes RALs. I tried to send him an email about this, through his foundation, but no response so far. Any way to follow up further on this with Magic?

Bob Giloth said...

I wonder if there is a "Sports Heroes for Social Responsibility" we could contact. Magic has done other great stuff -- just saw more in a Southwest Airlines (or Alaska Airlines) mag.