The 10 biggest federal income tax breaks (and how much they cost)
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greenforest32
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« on: May 30, 2013, 09:35:05 AM »

http://www.npr.org/blogs/itsallpolitics/2013/05/29/187122107/the-10-biggest-tax-breaks-and-how-much-they-cost

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http://www.washingtonpost.com/business/economy/richest-20-percent-get-half-the-overall-savings-from-tax-breaks-cbo-says/2013/05/29/645f75c6-c894-11e2-9245-773c0123c027_story.html

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TeePee4Prez
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« Reply #1 on: June 28, 2013, 01:33:47 PM »

IMO

Cap mortgage indebtedness to somewhere in the ballpark of $500K in a lower home value area to $1 million in a higher area and set caps by county.

Cap gains and dividends= ordinary income!
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traininthedistance
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« Reply #2 on: June 28, 2013, 02:17:00 PM »

The mortgage interest deduction is one of the absolute worst pieces of public policy America has.

And of course the preferential rate for capital gains and dividends (as well as the exclusion of assets transferred at death) is also pretty bad.  I don't think its collateral effects are nearly as corrosive, but it is a massive giveaway to people who need it the least.

I'm mostly okay with the other tax breaks listed here, actually.  
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DC Al Fine
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« Reply #3 on: June 28, 2013, 02:44:45 PM »

The mortgage interest deduction is one of the absolute worst pieces of public policy America has.

Indeed.
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snowguy716
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« Reply #4 on: June 29, 2013, 02:48:23 PM »

We really need to make capital gains taxable like regular income and go even higher on ridiculous sums.

Someone who invests his pittance in hopes of a decent retirement shouldn't be taxed to death.  But obviously Mitt Romney shouldn't get benefits.  Every time he invests, it should result in a whittling away of his wealth until he's more in line with the regular people he loathes so much.
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DC Al Fine
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« Reply #5 on: June 29, 2013, 03:06:38 PM »

We really need to make capital gains taxable like regular income and go even higher on ridiculous sums.

Someone who invests his pittance in hopes of a decent retirement shouldn't be taxed to death. 

We already have that. They're called 401k's, IRA's etc.

I'd personally be happy with taxing Cap Gains/Dividends/Interest the same as Ordinary income and be done with it.
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snowguy716
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« Reply #6 on: June 29, 2013, 04:53:24 PM »

We really need to make capital gains taxable like regular income and go even higher on ridiculous sums.

Someone who invests his pittance in hopes of a decent retirement shouldn't be taxed to death. 

We already have that. They're called 401k's, IRA's etc.

I'd personally be happy with taxing Cap Gains/Dividends/Interest the same as Ordinary income and be done with it.
Of course that would be ideal.  Punishing Mitt Romney aside, I believe in equality of opportunity.  People who have enough money to make enormous gains off of the stock market have enjoyed a very privileged opportunity that nearly all of the rest of us don't have.

Stop incentivizing the wringing of piles of other peoples' cash to see what money you can get out of it.  Instead businesses can use other channels for capital.. like low interest loans that are made available to anybody with a good idea.  (One of the problems is that the super rich have hidden the door into their world and don't want to make that info public.  Equality of opportunity means making the location of that door public, in a metaphorical sense.)
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tpfkaw
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« Reply #7 on: June 30, 2013, 08:45:14 PM »

You people do realize that if all these tax breaks and "tax breaks" were eliminated the tax code would be far less progressive and "the 47%" would be more like "the 5%" or so.  But, you know, perhaps you might start by going after the $400+ million the Kennedy family has in Fijian bank accounts.

We really need to make capital gains taxable like regular income and go even higher on ridiculous sums.

Someone who invests his pittance in hopes of a decent retirement shouldn't be taxed to death.  But obviously Mitt Romney shouldn't get benefits.  Every time he invests, it should result in a whittling away of his wealth until he's more in line with the regular people he loathes so much.

Of course that would be ideal.  Punishing Mitt Romney aside, I believe in equality of opportunity.  People who have enough money to make enormous gains off of the stock market have enjoyed a very privileged opportunity that nearly all of the rest of us don't have.

Stop incentivizing the wringing of piles of other peoples' cash to see what money you can get out of it.  Instead businesses can use other channels for capital.. like low interest loans that are made available to anybody with a good idea.  (One of the problems is that the super rich have hidden the door into their world and don't want to make that info public.  Equality of opportunity means making the location of that door public, in a metaphorical sense.)

Yay, Mugabenomics!

The leftist position on capital gains taxes is the one which is most transparently motivated by jealousy as opposed to any pretense of sound public policy, a fact you apparently seem to be proud of.

Nevertheless, the facts show a strong inverse correlation between capital gains tax rates and revenue, suggesting that the Laffer curve (i.e. maximum government revenue) peaks near zero on capital gains:



Secondly, capital gains taxes serve to decrease liquidity in financial markets, which increases the likelihood of panics.  Since the tax must be paid in order to realize the capital gain, investors will hold off on selling in order to avoid paying the tax.  The greater the capital gain becomes, the greater the incentive to hold instead of sell.  Then, if there is a sell-off in the equity or security, the tax is reduced, increasing the incentive to sell.  If the capital gain is wiped out entirely or becomes negative, there is suddenly no longer any disincentive to selling and all of the buy-and-hold investors will sell at once, creating a panic.  Capital gains taxes incentivize unsound investment practices by restricting supply, such that the prices of equities and securities will not typically be an accurate reflection of their underlying values, triggering inevitable panic selling later on.

I'm not sure what you figure the Mitt Romneys of the world would do if you essentially outlawed their investing their money (hint; they would invest it in other countries).  You do seem to realize this sort-of, hence your proposal to have some entity, presumably the government, since private entities give market-interest-rate loans depending on creditworthiness and collateral, give out "low interest loans that are made available to anybody with a good idea."  While such Heroes of Socialist Labor might abound, perhaps one might consider that a good way of judging a "good idea" might be if actual people are willing to pay for it with their own money.

It is indeed a shame that it seems difficult to become super-rich nowadays, as opposed to the olden days when anyone who wanted to could become super-rich.  Nevertheless, I think I may have some insight.

HOW TO BECOME SUPER RICH:

1. Get into Harvard Business School (other first-tier business and law schools, or undergraduate business/finance programs work too, but HBS is your best bet).  If you don't have the brains or the grades, a poorly-kept secret is that you can simply check off "Hispanic" and/or "Native American" on your application as needed.  There is no actual definition of those ethnic groups.

2. Seek out and make friends with the super-rich legacies.  Join their racquetball club (THIS IS IMPORTANT.  Racquetball, golf, lacrosse, crew, whatever it is they do, do it too).  Take dad's jet to San Juan with them.  Meet dad and laugh at all his jokes.

3. Go into investment banking.  (NB: You actually have to have some aptitude for investment banking.  There was a brief interlude in the 90s/early 00s when anyone could look good at investment banking, but that time has passed).

alternatively

1. Create an "app."  It should involve some combination of "social media," taking pictures, and mobile payments.  NB:  It helps if you drop out of a first-tier college immediately prior to creating your "app."

2. Convince a room full of confused 58-year-olds to give you $millions for your "app."  Especially persuasive types may be able to get $100millions, or $millions for your "app" idea.

alternatively

1. Come up with a particularly useful and valuable invention or business idea.

2. Sell the idea/start a business.

alternatively

1. Be elected to Congress.

2. 5-figure "speaking fees" and 6-figure "advances" for your ghost-written book of which 3000 copies are printed.

3. Retire/be defeated.

4. Get a 7-figure lobbying contract.

alternatively

1. Buy a lottery ticket.

2. Be lucky/Whitey Bulger.
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snowguy716
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« Reply #8 on: June 30, 2013, 11:02:01 PM »

All I see in that graph is relative stability at a time when maximum rates were higher than today.. and then a series of massive bubbles and panics when economic retardism was implemented beginning in the 1970s.

When observations don't match your theory... it doesn't matter how pretty your theory is or how pretty YOU think your theory is.  If the observations don't match the hypothesis.. your theory is wrong.

I'll bet you're waiting on that runaway inflation to come knocking aaaaaaaaany day now.  But when you delude yourself to the point that you have, cognitive dissonance forms and it no longer has to make sense for you to keep believing anymore.
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tik 🪀✨
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« Reply #9 on: July 01, 2013, 04:09:30 AM »

Dear wormyguy,

Thank you for your explanation of how to get rich. Unfortunately I never have good ideas, I don't have the money to enter exclusive universities, I don't want to fake getting along with rich people (or their daddies), don't have time to learn how to program an app because I'm busy trying not to be homeless, and I hate the smell of old people. In fact, I don't even want to be rich. I don't have the motivation or energy to start my own business, be my own boss, or even think of an idea to sell.

I just want to work eight hours a day and get paid more than what I need. I would be interested in buying a house someday, and I promise I don't waste my money. I don't think I should earn as much as those who have exclusive skills. I just want to be comfortable. I have just as much worth to society as the more intelligent, more socially apt, and in fact perhaps I'm better because I'm not cunning, ruthless, or greedy. We live in a first world country. Why should I needlessly suffer when there is plenty of money for everyone? Why should they benefit so many orders of magnitude more than me, doing my small part?

Yours truly,
Most people
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politicus
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« Reply #10 on: July 01, 2013, 05:17:28 AM »

Dear wormyguy,

Thank you for your explanation of how to get rich. Unfortunately I never have good ideas, I don't have the money to enter exclusive universities, I don't want to fake getting along with rich people (or their daddies), don't have time to learn how to program an app because I'm busy trying not to be homeless, and I hate the smell of old people. In fact, I don't even want to be rich. I don't have the motivation or energy to start my own business, be my own boss, or even think of an idea to sell.

I just want to work eight hours a day and get paid more than what I need. I would be interested in buying a house someday, and I promise I don't waste my money. I don't think I should earn as much as those who have exclusive skills. I just want to be comfortable. I have just as much worth to society as the more intelligent, more socially apt, and in fact perhaps I'm better because I'm not cunning, ruthless, or greedy. We live in a first world country. Why should I needlessly suffer when there is plenty of money for everyone? Why should they benefit so many orders of magnitude more than me, doing my small part?

Yours truly,
Most people

Huh
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tik 🪀✨
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« Reply #11 on: July 01, 2013, 05:25:00 AM »

They have the sour smell of impending death in their hairy, hairy orifices. You hadn't noticed?
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politicus
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« Reply #12 on: July 01, 2013, 06:01:27 AM »

They have the sour smell of impending death in their hairy, hairy orifices. You hadn't noticed?

I just wondered why you wrote it. What was the relevance in this context? This little perfidy ruins your otherwise well crafted response to wormguy.
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tik 🪀✨
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« Reply #13 on: July 01, 2013, 06:50:07 AM »

They have the sour smell of impending death in their hairy, hairy orifices. You hadn't noticed?

I just wondered why you wrote it. What was the relevance in this context? This little perfidy ruins your otherwise well crafted response to wormguy.

Thanks. I just talk that way, even in real life. Probably something I should work on if I want to schmooze on yachts.
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Torie
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« Reply #14 on: July 01, 2013, 09:00:43 AM »

Told you the biggest game was in the pension plan arena. But for some reason, the revenue hunters were not interested. Odd that.
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Snowstalker Mk. II
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« Reply #15 on: July 01, 2013, 06:48:33 PM »

Shit, I'm Hispanic. Guess I'm Harvard-bound!
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« Reply #16 on: July 01, 2013, 07:00:01 PM »

Dear wormyguy,

Thank you for your explanation of how to get rich. Unfortunately I never have good ideas, I don't have the money to enter exclusive universities, I don't want to fake getting along with rich people (or their daddies), don't have time to learn how to program an app because I'm busy trying not to be homeless, and I hate the smell of old people. In fact, I don't even want to be rich. I don't have the motivation or energy to start my own business, be my own boss, or even think of an idea to sell.

I just want to work eight hours a day and get paid more than what I need. I would be interested in buying a house someday, and I promise I don't waste my money. I don't think I should earn as much as those who have exclusive skills. I just want to be comfortable. I have just as much worth to society as the more intelligent, more socially apt, and in fact perhaps I'm better because I'm not cunning, ruthless, or greedy. We live in a first world country. Why should I needlessly suffer when there is plenty of money for everyone? Why should they benefit so many orders of magnitude more than me, doing my small part?
Yours truly,
Most people
I worked as a cashier at a fast food chain. John (not his real name)was the manager. Who do you think deserves more pay?
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Torie
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« Reply #17 on: July 01, 2013, 07:51:41 PM »
« Edited: July 01, 2013, 07:53:44 PM by Torie »

Dear wormyguy,

Thank you for your explanation of how to get rich. Unfortunately I never have good ideas, I don't have the money to enter exclusive universities, I don't want to fake getting along with rich people (or their daddies), don't have time to learn how to program an app because I'm busy trying not to be homeless, and I hate the smell of old people. In fact, I don't even want to be rich. I don't have the motivation or energy to start my own business, be my own boss, or even think of an idea to sell.

I just want to work eight hours a day and get paid more than what I need. I would be interested in buying a house someday, and I promise I don't waste my money. I don't think I should earn as much as those who have exclusive skills. I just want to be comfortable. I have just as much worth to society as the more intelligent, more socially apt, and in fact perhaps I'm better because I'm not cunning, ruthless, or greedy. We live in a first world country. Why should I needlessly suffer when there is plenty of money for everyone? Why should they benefit so many orders of magnitude more than me, doing my small part?
Yours truly,
Most people
I worked as a cashier at a fast food chain. John (not his real name)was the manager. Who do you think deserves more pay?

The post to which you responded used the term "several orders of magnitude." I don't think your example fits that. The chap obviously wants to slash the pay for celebrities/entertainers/star athletes to the bone. Hollywood would destroy the guy if there were any chance his ideas got traction. Tongue

Interfering with the market setting wages is of course quite insane. We just put up with the toothless minimum wage for cosmetic reasons, because few really make the minimum wage. The way to handle it all is though the earned income tax credit at the low end, and within reason, higher income tax rates at the margin at the high end than those below.
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Mr.Phips
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« Reply #18 on: July 01, 2013, 09:34:03 PM »

The preferential treatment of dividends needs to be eliminated in any tax reform.  The double taxation argument is ridiculous and false.  It's like saying I am double taxed because my employer pays taxes on what they earn and then I get taxed on what they pay out to me.  And dividends are not even mandatory the way wages are, they are a perk.  Companies don't even HAVE to pay dividends.  They can reinvest their earnings back into the company if they choose.

This is one tax break that needs to go.  With itemized deductions, I would propose a $50,000 a year ceiling for individuals and $100,000 ceiling for couples exluding charitable contributions.  That way you don't see people like Mitt Romney getting to deduct $2,000,000 a year in state taxes.

These are two tax expenditures that need to be yanked from the tax code before we even think about lowering rates.
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Torie
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« Reply #19 on: July 01, 2013, 09:40:09 PM »

So then you just sell some stock in lieu of dividends, a policy Microsoft had. It never paid dividends for tax reasons. If folks wanted some cash, they just sold some stock - at capital gains rates. Plus it causes economically inefficient accretions of corporate cash. And with the corporate tax, to the extent it is not passed on in higher prices, it is a double tax. Ideally, the corporate tax should go away (and with the pass on of part of that cost in the form of higher prices, it is a regressive tax), and then, and only then,  tax dividends as ordinary income.
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« Reply #20 on: July 02, 2013, 12:53:11 AM »
« Edited: July 02, 2013, 12:58:42 AM by wormyguy »

Dear wormyguy,

Thank you for your explanation of how to get rich. Unfortunately I never have good ideas, I don't have the money to enter exclusive universities, I don't want to fake getting along with rich people (or their daddies), don't have time to learn how to program an app because I'm busy trying not to be homeless, and I hate the smell of old people. In fact, I don't even want to be rich. I don't have the motivation or energy to start my own business, be my own boss, or even think of an idea to sell.

I just want to work eight hours a day and get paid more than what I need. I would be interested in buying a house someday, and I promise I don't waste my money. I don't think I should earn as much as those who have exclusive skills. I just want to be comfortable. I have just as much worth to society as the more intelligent, more socially apt, and in fact perhaps I'm better because I'm not cunning, ruthless, or greedy. We live in a first world country. Why should I needlessly suffer when there is plenty of money for everyone? Why should they benefit so many orders of magnitude more than me, doing my small part?

Yours truly,
Most people

Dear "Most People,"

Thank you for your letter this morning.  We appreciate your concerns.  Please forgive the form-letter nature of this reply, as we are very busy, working more, on average, than any other income group of people.  In fact, among us "super-rich," we tend to work 60 hours a week or more.  If we are doctors or surgeons, we are on call 24 hours a day and seven days a week.  If we are lawyers, we must spend every waking minute attending to our client's needs, or we will lose our cases and our reputation.  If we run a business, we are always the first to come in and the last to leave, and the one who must stay awake at night worrying about every conceivable threat to the company's future.

It is unfortunate that you rarely have good ideas.  We don't always have good ideas either, but the good ideas we have are really, really good.  If you could not benefit from the good ideas that people like us have had, you would still be living in a grass-roofed hut and studying entrails to forecast the next rainfall.  Actually, among those of us who have good ideas, all that we have made is because of people like you, who have chosen, of their own free will, to pay us their own money for what we have created.  Thank you, even if the feeling is unrequited.

We are also sorry that you did not enter an "exclusive university."  Not all of us or even a majority went to such a university ourselves, but we will speak for those who did.  Contrary to popular belief, the most exclusive universities (in the US) typically also have the most generous financial aid packages and often cover the entire tuition of undergraduates whose families cannot pay full-rate.  They are also in love with stories about "overcoming adversity," unless you are a white person from Appalachia or the Deep South.*  The way most of us got into such an exclusive university is by working hard - really hard - during high school.  While you were toking under the bleachers, vegging out on video games, daydreaming about your classmates, or shoving us into lockers, we were hard at work doing with excellence every last shred of work the teacher assigned and more.  It is probably not surprising that businesses looked at us first instead of you when seeking to fill positions that required both high intelligence and very strong work ethic.

We understand that you do not have the wherewithal and drive to start your own business or be your own boss.  Again, that's true for most of us as well.  But let us now speak for those of us who did.  We are the ones who really understand why you don't want to try it yourself.  There's not many people who would take every last cent to their name and every penny they could borrow to make an investment which is extremely likely to fail.  There are not many who would work 80, 90 hour weeks at no pay - negative pay, maxing out every credit card and overdrafting every bank account to pay for your expenses, in a state of perpetual panic that you won't become profitable in time, reduced to begging for new investors.  And even if you're successful, that's what you'd be doing for the first few years or so.  The fact is that the vast majority of new businesses fail.  Even the ones which technically succeed rarely feature proprietors who work less or earn more than they would otherwise.  If anyone claims that the business they started was easy or quickly turned a profit, they're lying, or they got into and out of the right racket (internet, real estate, "apps") at the right time.  Even in that case they're probably still lying.

In fact, we successful entrepreneurs usually are not on our first try.  That's right; we took years off our lives with toil and worry, borrowed and begged for every dime we could get, and for our efforts were left broken and bankrupt, and yes, homeless.  And then we did it all again, at least once.  You may be asking, so what?  Well, for one, every employee job that exists exists because of one of us.  It is because one of us embarked on that insane journey that you have the opportunity to live a first-world lifestyle such as our own.  And are we thanked for this, doing what you admit you cannot do for yourself?  No, we're always the bad guy, the "asshole," "greedy," "evil," you name it, for choosing to, with our own money and effort, create something that is pleasing to you the consumer, and using what we make from that to hire and pay you the worker.  We don't ask for thanks, because most of us actually aren't narcissists, or at least any more narcissistic than anyone who would assume that anyone more successful than themselves must have gotten to that point by being a bad person.

We get it.  You take us for granted.  You think "that doesn't look so hard!" or "anyone could do that!"  You do not stop to consider what would happen if people stopped trying to start new businesses, or if the tax and regulatory compliance burden were ratcheted up another few notches when most of us can remember a point when all that stood between us and bankruptcy was a few hundred dollars or less.  You could even say it benefits us, by keeping out the competition, but we are naturally empathetic people.  We want others to succeed where we have succeeded.  And yes, maybe we are somewhat special people, and maybe we do contribute to society more than most, and maybe we do deserve to make a bit more, or even quite a bit more of what you yourselves have chosen to give us.

So we are left at a bit of a quandary.  Why is it that "most people" think that we are somehow immoral for doing exactly what "most people" would do in our position, whether investing for our retirements, minimizing our tax burdens (like absolutely everyone including yourself does), or providing for our children?  Such horrible crimes against humanity are sociopathic and evil, according to some.  To that we can only shake our heads.

We don't hate you, most of us used to be one of you.  Many of us are first or second-generation immigrants who came to this country with nothing.  Nearly all of us have worked sh[inks]y jobs just like you.  We get it.  Do you get us?

Sincerely yours,

"Rich People"

*We assume that your "most people" is the one that likewise sneers with hostility at those "most people."
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snowguy716
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« Reply #21 on: July 02, 2013, 01:35:10 AM »

They have the sour smell of impending death in their hairy, hairy orifices. You hadn't noticed?

I just wondered why you wrote it. What was the relevance in this context? This little perfidy ruins your otherwise well crafted response to wormguy.

Thanks. I just talk that way, even in real life. Probably something I should work on if I want to schmooze on yachts.
I actually assumed you said that about old people because you wanted to imply that you don't want to be a doctor or something.  Which is something wormy would suggest for would-be riches.  Well, along with his "poor little rich boy" schtick.
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« Reply #22 on: July 03, 2013, 05:00:43 AM »

We just put up with the toothless minimum wage for cosmetic reasons, because few really make the minimum wage.

Even if few people did make the minimum wage, do you think that employers would still pay its current rate were it to be reduced or abolished?
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« Reply #23 on: July 03, 2013, 09:27:22 AM »

We just put up with the toothless minimum wage for cosmetic reasons, because few really make the minimum wage.

Even if few people did make the minimum wage, do you think that employers would still pay its current rate were it to be reduced or abolished?

Presumably, because they could pay less now.
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memphis
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« Reply #24 on: July 03, 2013, 11:54:52 AM »

1. Bureau of Labor and Statistics reports that 3,800,000 people worked at jobs that paid them at or below the minimum wage. I would not call that number of people "few."
http://www.bls.gov/cps/minwage2011.htm
2. The EITC, while better than nothing, is not much income support. For a working mother with one child, the maximum benefit is about $3,000/year. And that's for a woman who makes a paltry $16,000/year.
3. Most well to do people are not celebrities. There are far more investment bankers than movie stars or pro athletes.
4. I think it's adorable that wormyguy has the secret to Lifestyles of the Rich and Famous all figured out. And so good of him to take a break from his caviar dreams to explain it to the rest of us. I'm 100% sure that he is on the fast track to success.
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