Taxation without representation: Visa, MasterCard, and Discover strike again

Since well before President Barack Obama's inauguration, America's biggest corporations - with the unwitting help of the "tea party" crowd - have been doing their very best to redirect populist anger away from Wall Street (where it belongs) and towards the federal government, which has slowly succeeded in treating the symptoms of the Great Recession while utterly failing to address its causes.

Every so often, however, corporations quietly remind us who the real villains are by informing us that they're unilaterally changing their policies.

Today was one of those days. As I opened the monthly statement from our merchant services provider (the company that handles our credit card payment processing), I was greeted with the following notice:

Attention!

Card associations periodically review their interchange rate programs and other fees, modifying them as they deem appropriate. This is to advise you the associations have recently announced modifications to many of their interchange rates and other fees. Based on a variety of factors, including the recent association actions and other business considerations, we will be raising your discount rates.

Effective April 1, 2010, qualified discount rates for MasterCard, Visa, and Discover full acquiring transactions, as applicable, will be increased by .03%.

Translation: We regret to report the credit card issuers have decided to jack up their rates again, because they can and nobody's going to stop them. We don't have much choice but to pass the increases on to you. Sorry.

Also effective April 1, 2010 for Discover full acquiring, the Discover International processing fee of 0.30% will be passed through to you. This fee is charged for card sales (including cash over and cash advances) when the country of where the merchant is located is different than the country of the issuer.

Translation: The suits who run Discover had a board meeting and somebody in the room came up with the bright idea to tack on this charge, which will help boost their bottom line. Genius! Ain't capitalism great?

But the best part of this notice was the following...

Visa has introduced several processing fees: Visa has introduced an international acquiring fee of 0.45% for international sales transactions or 0.90% of the transactions amount for sales transactions for high-risk merchants for the merchant category codes [list of codes]. Visa has also introduced an acquirer processing fee of $0.0195 for each Visa authorization. A Visa misuse of authorization fee of $0.045 will be applied to each authorization that is not followed by a matching sale. A Visa zero floor limit fee of $0.10 will be applied to each transaction that is submitted without a proper authorization.

Translation: We apologize for making your head spin with this mumbo-jumbo, but Visa told us to tell you that they're just not making enough money right now. A thirty-three percent increase in profit for Q1 2010 is simply not satisfactory. So be prepared to pay up to help Visa fatten that margin.

A couple months back, we microblogged a quote from a New York Times article which nicely sums up Visa's power and manipulative practices:

“A dollar is no longer a dollar in this country,” said Mallory Duncan, senior vice president of the National Retail Federation, a trade association. “It’s a Visa dollar. It’s only worth 99 cents because they take a piece of every one.”

And every time it raises taxes on merchants, Visa is making each Visa dollar worth a little less. Merchants can pass the higher Visa taxes onto their customers, but that means raising prices... and many merchants feel it's unfair to force customers who prefer paying by cash or check to pay hidden Visa taxes.

The alternative, however, is to not accept Visa cards at all, which results in lower sales, since a growing number of people prefer to pay with plastic.

Point is, merchants have no control over Visa's policies, even though those policies directly affect their livelihood. It's taxation without representation.

What's ironic is that this was what the original tea party - the Boston Tea Party - was about, all those years ago. Colonists in Massachusetts were protesting Parliament's decision to tax them without their consent. They asked royal governor Thomas Hutchinson to send the tea back to Britain; he refused... so liberty loving Americans threw it overboard into the harbor.

These days, it's not an imperialist foreign government that's taxing us without our consent; it's imperialist corporations. As George Lakoff writes, corporations are really unaccountable private governments... not persons:

Large corporations... are highly bureaucratic and impersonal, can be extremely wasteful, and - via tax deductions for business expenses, tax breaks and subsidies - use vast amounts of taxpayers' money, often in extravagant and wasteful ways. Because of patent law or the ability to buy out or drive out competitors, large corporations often consolidate their sovereignty over an industry and then, with competition highly restricted, can set high prices justified not by costs but by a desire for high profits. This is operation outside the market, like a private government. When this happens, corporations have, essentially, the power to tax citizens, with money going to corporate profits.

Unfortunately, this truth is lost on today's "tea party" protestors, who, unlike the revolutionaries of the 1770s, are really just tools of Wall Street.

They think they're patriots, but all they're doing is operating a huge smokescreen on behalf of this country's biggest corporations, who want Americans to take out their anger on Democrats in Congress instead of them.

Meanwhile, their lobbyists are already doing all they can to convince those same elected Democrats not to strengthen regulations, give regulators more power to enforce existing regulations, or appoint new regulators who won't be lapdogs. It's a giant pincer strategy, and to date, it's been pretty darn effective.