Magic Johnson and the Tax Refund Rip-off
Why is Johnson using his considerable fame and influence to peddle tax anticipation loans to poor people?
From HuffPo:
If you watched the NCAA basketball Final Four, you couldn’t miss former Michigan State star Earvin “Magic” Johnson. He was constantly being interviewed or shown on camera.
There is another place you can find Magic Johnson: doing commercials for Jackson Hewitt’s “Money Now.” “Money Now” is a tax refund loan operation.
Tax refund loans (also called refund anticipation loans) are in a class of financial products marketed primarily to poor people.
Someone described tax refund loans as a payday loan guaranteed by your tax return.
That hits the nail on the head.
Like payday loans, the fees and interest rates on tax refund loans are outrageous.
According to the San Francisco Chronicle, the annualized interest rate for tax loans is 40% to 500%.
According to IRS data, 8.7 million people took out a tax refund loan in 2007. Of those 8.7 million who got the loans, 67% received an Earned Income Tax Credit.
The Earned Income Tax Credit is a program aimed to help the working poor. Only 17% of all taxpayers get it.
When 2/3 of the borrowers come from less than 1/5 of the population, it doesn’t take a genius to see the business model. Tax refund loan vendors must view the working poor as easy pickings.
They are probably right. READ MORE…
Photo: Wireimage/Getty
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13 Responses to “Magic Johnson and the Tax Refund Rip-off”
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if black folks are not smarter with their money then do you blame him or anybody else? everyone else been making a buck off poor people….what makes HIM any worse than H & R Block that invented the rapid refunds back in the 80′s? this article while helpful is HELLA LATE. since again rapid refunds aimed at the poor is not new. it is wrong? yes but i don’t knock nobody hustle.
and hail…HIV meds are expensive….
lol@Kwall
I still find it hard Magic can be the spokesperson for anything with his no talking self
It only takes a week or so to get your money electronically, if you can’t manage your funds to the point that you can’t wait 7 days, then no amount of criticizing Majic Johnson will help you… you just have poor money management skills and need to seek help from Jesus.
business is business…it’s not Magic’s fault that so many people manage their finances poorly…
since everyone said what i was gonna say …
imma leave with this
I love bassettball
magic left the game before the atheletes were getting 100 million dollar contracts, so he still got bills. im so glad they are so concerned about poor people, or is it because the economy is so bad, the precious white people are using this service and they dont want the black man getting some money ?
LOL LOL all ya’ll are crazy!!! but i agree from the top to the bottom!
I am not mad at Magic. Some ppl are desperate and want their money now because they owe back taxes, child support or a student loan and would rather lose a chunk rather than not get any. While others let their refund burn a whole in their pocket as soon as they found out how much they were getting back and want it NOW.
if i had the money to invest, I would invest in these too!
why is it after xmas everyone is looking forward to getting their w-2′s for tax time? if ur broke 11 months out the year waiting on tax returns then u need a financial advisor. i like to turn my taxes in on the april 15th deadline so i can have money to splurge on in the summertime while everyone is broke by feb!
well being that im a tax preparer i see this daily. if you got 2 kids worked all last year made like 12gs and get 5-6g’s back then typically that person wants it ASAP. they dont mind losing 130 bucks or so to have the money back quickly especially when on paper u getting back in one lump sum almost half of what u made the entire year. but another thing is people not having the available money to pay to get there taxes prepared so they say take it out the refund which is going to a bank product which will cost you like 50 bucks on top of your refund to have it done that way. since you getting 50 bucks taken then a lot of the times the rationale is why wait the normal 2 weeks when i can just let them take 50 more than what they taking anyway and get it back tomorrow. also if the refund is around the 1500 bucks or less area then the difference in the price of the ral and the regular bank product is often less than 20 bucks so thats another reason people opt for the ral
I’m sorry…
Magic has POSITIONED HIMSELF as being a leader in the Black community regarding being responsible and working hard and doing things the RIGHT WAY…
Nobody ASKED him to take that much needed position…he took that ambassadorship upon himself and have been very successful with this…
HOWEVER…
When I saw him pushing the anticipation loans…I lost ALL RESPECT FOR HIM!!! Because anticipation loans are HORRIBLE and DETRIMENTAL to the Black community who have ALWAYS made less money and have ALWAYS been in dire straits…
Don’t be on “Larry King” one day talking about all the “good you do in the hood”…the pimping the next…
I’m just sayin’…
KaraZ Says:
It only takes a week or so to get your money electronically, if you can’t manage your funds to the point that you can’t wait 7 days, then no amount of criticizing Majic Johnson will help you… you just have poor money management skills and need to seek help from Jesus.
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I heard that. I did rapid refund a few times too many years ago for me to remember. At that time it was in it’s infancy and I recall paying over $200 in fees. I’m too cheap for that. I can pay two or three monthly bills with that $200. So even when the IRS was taking three weeks to send the return I was cool with it. Now that they are getting it out in no time there really is no reason at all to do rapid refund unless your lights are off or you are scheduled to be evicted like right now. Otherwise I can’t think of any reason for it.