God’s concern for the poor, the “widow and the orphan” and anyone treated unjustly translates into important priorities for the churches today. Together through the Council, Kentucky’s churches in recent years prioritize these issues: ending exploitative lending practices, stopping efforts to expand gambling casinos’ operations, establishing an Earned Income Tax Credit in Kentucky, and encouraging tax reforms that are sustainable and progressive.
Council finds payday loan interest rates “predatory” and calls for caps
Too many people are having to live from paycheck to paycheck, juggling difficult decisions about what bills to pay. Under such high-pressure circumstances it is not surprising that payday loans are seen as an attractive way to secure shelter, utilities and food for another week or two.
But when these kinds of loans go unregulated, a trap closes around the people who are most vulnerable. Usually they do not know the dimensions of the trap because no one explains the true amount of money they will really end up paying once they have repeatedly borrowed in this way. Most borrowers return at least six times.
Scriptures prohibit taking advantage of the poor, and specifically forbid usury against the poor (Exodus 22:25). Payday lending is the clearest form of usury against the poor that exists in our state. Payday loan rates in Kentucky exceed 400% APR. According to the Kentucky Coalition for Responsible Lending, each year an estimated 175,000 Kentucky families become ensnared in the payday loan debt trap, paying approximately $158 million annually in fees.
Local jurisdictions of 12 denominations serving nearly a million Kentuckians speak together through the Kentucky Council of Churches. We have issued a public statement calling for “limits or prohibition on predatory lending”. Our opposition to payday lending is in the larger context of our desire for a better life for people who are poor, especially a desire that they have wages they can live on, and access to quality, affordable health care.
We oppose predatory lending because it is counter to the care for our neighbors that God expects of us. This kind of lending cannot be described as aid, because true aid empowers persons to thrive and become responsible, contributing members of our community. Instead this kind of lending is a sinful exploitation of another person’s emergency, often leaving them much worse off.
We urge the faith community to support a cap on the interest rates that can be charged. The proposed cap of 36% will rank us with the states that are addressing this serious problem. In 2011, good progress was made toward this goal. Let’s keep working to educate Kentuckians so a cap can be instituted in 2012!
Stop the expansion of gambling
We seek to stop the expansion of gambling because it exploits people whose families can least afford the losses, fosters addictions and corrupts public decision-making. Recent research from health and social sciences only serves to heighten concerns as you will see if you read Why Casinos Matter at this link. Legislators and the press have repeatedly heard from the Council on this issue of economic justice because of our policy statements about gambling. Our member dioceses of the Catholic Church have offered their distinctive voice as well. Be sure your public officials hear from you too! On Kentucky Tonight (KET) in February 2012, KCC Executive Director Marian McClure Taylor expressed the opposition of churches to gambling; see especially minutes 15-17 on this KET video.
Establish an Earned Income Tax Credit
Together with the Kentucky Youth Advocates we encourage the public and our elected officials to consider the benefits for the working poor of having an Earned Income Tax Credit in Kentucky to mirror the successful program that lifts families out of poverty nationally. Please watch the Bread for the World video that helps to explain this idea's merits.
Bring about Tax Reforms
In 2012 a blue ribbon tax reform commission is studying ways to modernize the Commonwealth's tax system to take into account the shifts in the economy toward services, to consider what will attract more business investments and to provide a more adequate and sustainable flow of revenue to pay for necessary public services and programs. The Council works to make sure that the search for business competitiveness is enlightened by a broad acknowledgement of the link between human development (health, education, community life) and a good business environment. We also want to make sure the commission hears about the dire needs for help many families experience, and that the commission avoids tax approaches that give an undue share of burden to people who are struggling economically.