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New Study Shows How Overregulating Short-Term Lenders Harms Consumers

We at CFIF have consistently highlighted the peril of federal, state and local government efforts targeting the short-term consumer lending sector.

Less than two years ago, we specifically sounded the alarm on a New Mexico law artificially restricting interest rates on short-term consumer loans.

Well, a new study entitled "A New Mexico Consumer Survey:  Understanding the Impact of the 2023 Rate Cap on Consumers" that surveyed actual borrowers confirms our earlier warnings:

Key findings include:

•Short-term,small-dollar loans help borrowers manage their financial situations, irrespective of the borrower’s income.

•The rate cap has failed to improve the financial wellbeing of New Mexicans, specifically those who had previously relied on short-term, small-dollar loans.


November 27, 2023 • 03:57 PM

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Warren Buffett: Hypocritical and Factually Incorrect in Calling for Higher Taxes Print
By Timothy H. Lee
Thursday, August 18 2011
Those who advocate higher taxes should get their facts correct before advocating policies that will harm our economy and kill jobs.

Want to silence a liberal? 

Simply ask anyone demanding higher taxes to produce copies of their own tax returns. 

Many who insist on tax increases most loudly and sanctimoniously, including Barack Obama himself, didn’t themselves pay Uncle Sam at the rates they advocate.  So try it.  You’ll likely witness an amusing deer-in-the-headlights expression, some stuttering and then some sort of preposterous rationalization as to why they didn’t. 

The issue took on renewed relevance this week when The New York Times ran a commentary by Warren Buffett entitled “Stop Coddling the Super-Rich.”   Claiming that he pays a lower percentage of income in taxes than his staff, Buffett called for higher taxes: 

“What I paid was only 17.4 percent of my taxable income – and that’s actually a lower percentage than was paid by any of the other 20 people in our office.  Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent…  The mega-rich pay income taxes at a rate of 15 percent on most of their earnings, but pay practically nothing in payroll taxes.  It’s a different story for the middle class:  typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.” 

Naturally, President Obama and the effete commentariat on the political left immediately hoisted Buffett’s banner and blamed insufficient taxation of “millionaires and billionaires” as the source of our growing fiscal crises. 

There are a few problems, however. 

Not only are Buffett’s claims hypocritical, they’re factually incorrect. 

First of all, nine-tenths of the small businesses and individuals who would be hit by the tax increases advocated by Obama and his minions don’t even qualify as “millionaires or billionaires.”  As pointed out by The Wall Street Journal in response to Mr. Buffett’s column, 90% of them are merely “thousandaires”: 

“In 2009, 237,000 taxpayers reported income above $1 million and they paid $178 billion in taxes.  A mere 8,274 filers reported income above $10 million, and they paid only $54 billion in taxes.  But 3.92 million filers reported income above $200,000 in 2009, and they paid $434 billion in taxes.  To put it another way, roughly 90% of the tax filers who would pay more under Mr. Obama’s plan aren’t millionaires, and 99.99% aren’t billionaires.” 

Second, as Stephen Moore pointed out in his commentary, “Warren Buffet Is Wrong on Taxes,” millionaires and billionaires actually pay a higher portion of their income in taxes than the middle class, not lower. 

“According to the Congressional Budget Office (CBO), middle-class families in 2007 (earning between $34,000 and $50,000) paid an effective 14.3% of their income in all federal taxes.  The top 5% of income earners paid 27.9% and the top 1% paid 29.5%.  And what about the highest earners?  Americans with annual incomes above $2 million paid an average of 32% of their income in federal taxes (the most recent year for which data are available).” 

It’s bad enough that Buffett is incorrect and providing ammunition for those who spread his toxic message of higher taxes.  But he’s a hypocrite as well. 

After all, nothing is stopping him from simply paying taxes at the rate he advocates.  People are perfectly entitled to send additional tax payments to the IRS if they wish.  So if Mr. Buffett truly regrets that he paid only 17.4% of his income to the federal government, he could have paid the 36% rate that he claims is his office staff’s average. 

The same is true of Obama, who did not file his 2010 income tax return at the rate he prescribes.   Why not? 

Additionally, the higher tax rate that Obama and liberals advocate would disproportionately penalize small businesses, which create most new jobs in America.  How’s that for a jobs program?  Nor will higher taxes alleviate the federal deficit or growing debt.  History shows time and again that the federal government simply spends new revenues, rather than pay off accumulated debt.

Those who advocate higher taxes should get their facts correct before advocating policies that will harm our economy and kill jobs.  They also have an obligation to practice what they preach. 

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