Truth, Justice and the $9.15

A financial institution can carry out any practice, however unethical, so long as they disclose it in advance in the giant wall of fine print they make new customers agree to. In violation of this rule, American Express charged some customers a 2% fee for foreign currency transactions.

A group of enterprising lawyers launched a class action suit on behalf of a cardholder named Edward LiPuma, arguing that the disclosure of the fee was incomplete, and they won.

Even though the suit was settled back in 2005, the glacial pace of the American justice system means that it took until this week for Wonk the Plank to receive our cut of the $75 million settlement.

That'll teach 'em.

Sadly, our recovered fees won’t even compensate us for the administrative burden of filling out the claim forms and depositing the check.

Revenge...errr... Justice is a dish best served cold!

By the way, American Express is still charging the fee, but now they disclose it more readily.

Reading The Tea Leaves

The convoluted, opaque nature of our tax code allows anyone to make unsubstantiated claims, no matter how preposterous, without fear of being challenged.

Wonk the Plank thought about that as we read that tax levels are at historic lows in the Washington Post, even as tea parties are held around the country to protest excessive taxation.

What’s wrong with this picture? People make contradictory generalizations about the tax code all the time, and no one calls them on it. The system is so complex that we can’t look at it ourselves to determine what’s fair or not fair. Instead, we leave it to think tanks and academics (often with ideological axes to grind) to give us contradictory answers about who’s getting a free ride and who is paying too much.

Even a question like “Do high income earners pay a greater share of their income in taxes?” can become the subject of a lame flame war between think tanks.  (Sorry Tax Foundation. You guys are usually solid but that kind of idiocy has no place on your blog.)

Slime

The cost of complying with our grotesquely bloated tax code is measured in so much more than dollars and cents. For example, there are the homeless people who need the powers of Wonk the Plank just to figure out their tax returns.

Then there are people who are almost paralyzed by the fear of doing something improper on their tax returns, like a woman we assisted recently. She had worked briefly as an independent contractor and was absolutely, 100% entitled to deduct her business expenses, meager though they were.

But Wonk the Plank really had to coax her into doing it. There’s a whole culture of sliminess associated with preparing business tax returns, which are full of greasy gray areas where exaggerations and out and out lies will go undetected. Our taxpayer thought at first that it would be better to bypass the whole sordid mess, pay higher taxes, and wash her hands of the affair.

Instead of shoveling out ever more regulations to intimidate people like Wonk the Plank’s taxpayer, how about a simple, transparent tax system so people can pay their fair share and still get to sleep at night?