Ducking Our Debts: Student Loans, Taxes, Credit Cards, Etc. (EP. 355)

Ducking out on our financial obligations regardless of type, student debt, credit card cards, taxes, or other, is always wrong. That is the subject of today's 10 minute episode.
Ducking out on financial obligations regardless of type is always wrong.

Introduction

Sean Hannity, stalwart in his opposition to taxpayers paying off student loans, voices a full-throated commercial in support of people who owe money to the IRS using his recommended solution to be relieved of some or all of that obligation.

When someone does not pay his student loans, the taxpayers get stuck. When someone does not pay what they owe to the IRS, the taxpayers get stuck again. When a credit card holder defaults on his bill, his fellow card holders pay up. And when an insured takes advantage of an insurance company, his fellow insured are harmed. 

We are all in this waterbed of life together. When someone defaults or cheats, millions of others get stuck. And not just with student loans.

That is the subject of today’s 10 minute episode.

Continuing

Today’s Key Point: We are all in this water bed of life together. It is impossible to lie down or even push ever so gently anywhere without affecting others. 

Ducking out on our financial obligations regardless of type, student loans, taxes owed, paying our credit card bills, being honest with insurance companies, etc., is always wrong. Not just with student loans, the only one of these 4 potentially ignored obligations in the news and in our conversations.

Many people are quite correctly against forcing taxpayers to take on obligations that others signed for in exchange for continuing their education. To me it is simple and clear. An hour on Google, at best, will tell the prospective student how much a specific college costs, and how much graduates in that field from that institution make per year. And how many of those grads get jobs and how long it takes to become employed. A 30 second calculation will reveal the attractiveness or unattractiveness of this path forward. For example, it does not take a math wizard to see that a potential $60K in student loan debt will be difficult to pay back with a degree in sociology from State U, where grads in the field make $35K, and have a 30% chance of being employed in their field. The rest are waiting tables, driving for Uber and Lyft, and complaining that they were misled. Many politicians, much of the media and some of the folks at home are in support of having taxpayers pick up all or some of these student loan obligations. Not surprisingly, I am not. (Funding Higher Education: Caution! EP. 292) 

All of that is clear and real, but what about other obligations that people are invited to have others pay on their behalf? 

Let’s look at the impassioned offers inviting us to reduce or simply not pay our credit card bills. And like the diet pill pushers, they stress that it is not our fault; those mean credit card companies have their nerve asking us to pay for products and services that we bought and have enjoyed. Just call this number, they say, and their team of Robin Hoods and Their Merry Men will make things right, invoking images of robbing the unworthy rich to pay the worthy poor. But that is not what is happening; the unworthy rich here are our fellow card holders. Overall, Americans owe $820B across over 500M card accounts, with over $30B written off every year–more in tough times. That $30B is paid for by the 500M accounts; that’s $60 per account. The key here is that the credit card companies adjust their rates to cover these losses and still make the profit needed to remain a viable business. If you and your partner have 7 cards between you, that’s $420 per year that you pay to cover those who do not pay up. In other words, the defaulter’s fellow credit card holders are the ones who get the bill when someone does not pay.

The same is true for those who don’t pay what they owe to the Internal Revenue Service. We hear the same impassioned voices, broadly hinting at the unfairness of the IRS when it has the nerve to collect unpaid taxes. The individual income tax has been the largest single source of federal revenue since 1950, with $1.6T collected from individuals in 2020. The most common percentage I see for owed but unpaid taxes is 16%, but let’s use a smaller percentage here: 10%. That means that at least $160B annually goes unpaid, with as much as $256B if the 16% figure is accurate. And here are the Sean Hannitys of the world working to absolve us of those debts. And when people do not pay what is owed, the government simply raises taxes on those of us who do. 

Most of us have seen videos of thieves walking, running or riding off with huge bags of stolen goods in broad daylight while employees and others either stand by or make videos. We are incensed at the laws that protect the thieves, and the brazen, “This is mine,” attitude of the thieves. But the shoplifters who get some of us worked up with their theft and attitude are playing small ball compared to the IRS cheats. Mind you, I am not talking about the people who pay their tax accountants to take advantage of perhaps unfair but entirely legal tax loopholes; I am talking about people who do not pay what they legally owe. Why the outrage at the relatively minor retail theft, and not at the wholesale theft from our national treasury?

Insurance claims. The person who gets his insurance company to pay for more than what is covered by his policy cheats his fellow policy holders. Like the credit card companies, the insurers raise the premiums to cover the cheating. Now here’s one that will likely light a fire. If an eligible person did not get the COVID vaccine and wound up hospitalized for a few days or even weeks, a significant part of that bill goes to his fellow insured–or the taxpayers if they are uninsured. Isn’t it time to raise health insurance premiums on the unvaxxed just as we do with smokers and others in higher risk categories?

On a smaller but clearly related note, the selfish people who do not return their shopping carts are right down there with those who litter with me. Both actions pass the buck and the bill to others. And along with those who do not meet  debt, tax and other obligations, these folks show a callous disregard for the others on the waterbed of life. We are all personally responsible for what we do on our part of the bed.

Speaking of personal responsibility, it does not stand alone; the two main and interdependent principles at Revolution 2.0 are:

  1. Personal Responsibility; take it, teach it and,
  2. Be Your Brother’s Keeper. The answer to the biblical question, “Am I my brother’s keeper?” is a ringing, unequivocal “Yes.” There is no other answer.

Where do you stand? What are you going to do? Remember, it does not matter where you stand if you don’t do anything. You can start by subscribing to these episodes, and encouraging others to subscribe with you.

As always, whatever you do, do it in love. Without love, anything we do is empty. 1 Corinthians 16:14

Contact

As we get ready to wrap up, please do respond in the episodes with comments or questions about this episode or anything that comes to mind, or connect with me on Twitter, @willluden, Facebook, facebook.com/will.luden, and LinkedIn, www.linkedin.com/in/willluden/. And you can subscribe on your favorite device through Apple Podcasts, Google Podcasts, Spotify and wherever you listen to podcasts.

Will Luden, coming to you from 7,200’ in Colorado Springs.

Will Luden
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