Some observations in the last couple of days started me thinking about the many hidden taxes we pay-not to the state or federal government, but to the corporations.
After court in Willimantic yesterday, I went to the co-op, and, while I paid for my purchase with a credit (actually debit) card noticed a sign that notified the members that the co-op’s entire profit for the previous year was about $4,000.00, while the fees it paid to credit card companies exceeded $14,000.00. Well, I thought, they could soften the blow somewhat by getting the gizmos they would need to let people use their cards as debit cards. Not so, I found out just today, when we were at a store where a small merchant gives 10% discounts to those who pay in cash. He figured that was approximately his cost on each credit or debit transaction. While debit cards formerly cost the merchants less or nothing, they now cost pretty much the same as credit cards. Checks (as long as the don’t bounce) and cash cost them nothing.
The hidden tax comes in because, while the merchants pay these costs directly, they do, of course, pass them on. So the banks are raking in something like 6% of every transaction (this is on top of the interest they charge the customers) in which a credit card is used. Even if you don’t use credit cards you are still paying the price, since the price of goods is artificially inflated. If you believe that the fees that are charged reflect the actual costs of the transactions, you live in la-la land. It probably costs more to process checks. It’s only an historical anomaly that forces the banks to consider check processing charges as a cost of doing business or to at least confine the charges to a direct charge to their own customers, who can shop around for better rates in a somewhat competitive environment.
It would, of course, never enter the minds of the people’s representatives to take a look at these fees and see if they bear any relationship to actual costs. Nor, for that matter, would the government consider setting up a governmental debit card system to compete with the banks and keep them honest. After all, if there were any interest in preventing banks from imposing excessive fees, outrageously high ATM fees would be a thing of the past. There is no true competition in the credit card industry, at least with respect to the fees charged to merchants. Even if one card issuer were to charge the merchants lower fees each merchant would still, to survive, have to accept all major credit cards.
In related news, Joe Nocera of the New York Times reports on the NFL’s attempt to force cable companies to make its cable station (NFL Network) a basic cable station. The NFL wants to charge the cable companies 70 cents a subscriber, which means we would all end up paying about a dollar more a month so we could watch 6 real football games a year, with the balance of the programming consisting of total crap. It makes the YES Network look like a steal. The cable companies don’t want to do it, so the NFL is turning to friendly state legislators and the FCC to force it down their throats. One idea is to force them into “baseball arbitration”, a form of arbitration in which the arbitrator must pick one side’s figure and can not split the baby. In other words, the NFL would maintain that its service should be on basic cable for 70 cents a month, and the companies would be arguing that the NFL should be on basic cable for, say, 20 cents a month. The arbitrator would pick one of those figures. The idea that the NFL should not be on basic cable at all would be off the table. I.e., the NFL is asking the FCC to force each cable customer in the nation (except for us lucky ones not “served” by the giant companies) to buy its product, whether we want it or not. It’s not unlikely that our conservative dominated FCC will agree, since increasing taxes is bad, but forcing people to give their money to corporations (and letting the corporations decide how much they should pay) is good.
To me, there’s no functional distinction between corporate imposed charges we have no choice but to pay, and what we commonly call taxes. The only difference is that the taxes we must not raise go to pay for schools, roads, etc., and yes, alas, unnecessary wars. Corporate imposed taxes, of which we should be no means complain, go straight into the pockets of CEOs, who, of course, themselves are exempt from taxation due to the wonders of the tax code and the beneficence of the aforementioned legislators, acting, strangely enough, in bipartisan harmony.
