A friend forwarded me an article today from the Associated Press. The article was titled “IRS head says budget cuts could delay tax refunds.” This could have a number of trickle-down effects on taxpayers expecting a their tax refund sooner than later. As well, many companies who serve those people can also be negatively impacted.

Here is the link: (http://hosted.ap.org/dynamic/stories/U/US_IRS_DELAYED_REFUNDS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-12-18-15-39-07)

Many Americans wait for their tax refund to pay off debt that has accumulated throughout the year. And the businesses who serve them (like many of you who are reading this post) have traditionally depended on their customers to payoff their obligations at tax refund time. Often, consumers are given the choice to wait until that refund comes in to do just that. It is a market dynamic that exists and over the years has become a give and take between consumers and businesses in a certain sector of the U.S. economy. So, a change in that balance brought on by a delay in tax refunds can be concerning.

The article also shows how government initiatives can have un-intended consequences and cause harm to Americans who have the least amount of financial cushion. It is suggested that Obamacare is the source of the delay because the Republicans cut down IRS funding as a back door technique to cripple its implementation. 2014 is the first tax year that the IRS will be tasked with the reporting of health insurance payments by taxpayers. The IRS budget cuts mean one more thing is added to the workload of smaller staffs causing slower tax return processing times, which in turn leads to a delay in when the refunds are issued.

Getting back to how these kinds of dynamics effect the short-term small dollar loan space – it is an example of what heavy government intervention can result in. Big government causes big problems! Many would agree that we should have stuck to a free market approach to health care and no government intervention. This minimizes un-intended consequences and creates fewer opportunities for politicians to make pawns out of hard working Americans who need to make every penny count. Many states have enacted heavy regulations on the short term small dollar loan industry that decimated businesses in those states while the consumer need remained the same. Where did the consumer go to get their needs filled?

Let’s keep these lessons in mind when it comes to the short term small dollar loan industry. Less restrictions and a free market model encourages competition, which is always best for consumers. Let the businesses decide…