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Topic: It's proven: Money feels better when you earn it
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thwap
rabble-rouser
Babbler # 5062
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posted 14 May 2004 08:58 AM
In the early 20th century, an Italian economist proposed an inheritance tax that worked over successive generations.The money earned by the dearly departed, would be left to the heirs at little or no taxation, but the heirs would pay a high rate of taxation on any money that they died, on the money that they had inherited (ie., didn't earn). So, if you inherit 2 million, you pay little or nothing; but if you pass on 3.5 million to your own heirs, 2 million of that is taxed at a high rate. by the way mr. oatmeal, the central aim of socialism is not to slurp at a trough, but to see that the fruits of society's productivity is justly shared. (That also happens to be the most efficient way to run an economy.)
From: Hamilton | Registered: Feb 2004
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praenomen3
rabble-rouser
Babbler # 4758
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posted 14 May 2004 10:01 AM
quote: Originally posted by thwap: ...the central aim of socialism is not to slurp at a trough, but to see that the fruits of society's productivity is justly shared.(That also happens to be the most efficient way to run an economy.)
But it runs into a problem with details. What level of sharing is "just", anyway? And the goal of having the "most efficient way to run an economy" just sounds like central planning. Some of the most successful economies are barely managed at all. It's like that old chestnut "To each according to his need, from each according to his ability." Sounds nice, but exactly how much is 'To' and 'from', and what constitutes 'need' and 'ability'? And who should have the authority to regulate those standards?
From: x | Registered: Dec 2003
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praenomen3
rabble-rouser
Babbler # 4758
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posted 14 May 2004 11:28 AM
Feudalistic? You mean like the Hatfield's and the McKoy's? "Gonna git me a new feudin' rifle wit' Pappy's inheritance 'fore the guvament gits it first!"Seriously, though, from what I remember about the feudal system, it was based on the understanding that feudal lords were vassels to the king, who in turn allowed them to run their affairs with relative automony under the condition of loyalty to the crown and their provision of armies to the crown in times of need. Are you suggesting that in this day and age, the loyalty to the crown is now loyalty to the ruling government party, and the provision of armies is now provisions of, say, campaign donations? And in return for that, today's feudal lords get to run their fiefs with a minimum of interference from regulatory bodies? It's a stretched, but interesting analogy. I'm all for the acquisition of familial wealth. Idle rich folks living off interest may offend our sensibilities, but I’ve never had one try to break into my car. And once your communist friend gets his wad of dough, he can redistribute it in whatever enlightened ways he sees fit rather than agitating for the rest of us to do it for him.
From: x | Registered: Dec 2003
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Dogbert
rabble-rouser
Babbler # 1201
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posted 14 May 2004 12:03 PM
quote: Who gives a shit if the parents worked hard to leave something for their children and grandchildren. Why should their damn kids get it instead of me?
So, in other words, you believe that in the random lottery of birth, those who happen to have been born to wealthy parents should be able to live in luxury their entire lives, never lifting a finger? I propose we have a race, between the world champion in the 100 meter dash... and me, an out of shape computer programmer. He can start at 100 meters from the finish line... I'll start at 2 meters. And when I cross the finish line first in these great capitalist olympics, the Oatmeal Savage shall be there to put the medal around my neck, crowning me the fastest man on earth. (edited for typo) [ 14 May 2004: Message edited by: Dogbert ]
From: Elbonia | Registered: Aug 2001
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thwap
rabble-rouser
Babbler # 5062
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posted 14 May 2004 12:18 PM
1. My definition of socialism was pretty rough and ready. There will be differences of opinion about what is just and what isn't, but that's getting into details.2. By "efficient" I just meant that conditions of greater equality produce better economic effects than conditions of the "Washington Consensus" (ie., put the majority of your population through hell, and it'll translate into economic bliss) or 'laissez-faire' which produces chaos and roller-coaster economies. 3. We will calculate which part of an heirs' estate was the original inheiritance by simply using the money value of the original inheritance. The whole idea came from Hugh Dalton's "Principles of Public Policy" but I don't remember the Italian economist he was inspired by.
From: Hamilton | Registered: Feb 2004
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Rufus Polson
rabble-rouser
Babbler # 3308
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posted 14 May 2004 07:46 PM
I'm solidly with Mr. Cromwell here.Why is it that right wingers so often talk about how there is, basically, a level playing field and so if people get rich it's due to their own efforts and they deserve it. Then the minute someone talks about inheritance tax--level playing field? Deserving things for working hard? What's that? If one generation slaved away to make a stack of money, there's arguments to be made for them having that stack, while they're alive. And for that matter, while they're alive there's nothing stopping them from using their money to buy their kids hot cars and expensive educations, giving them a leg up over poor kids right there. But their kids bloody well didn't do the work, so there's no argument that they themselves deserved a plugged nickel. The *only* argument for them getting the cash is oddly leftist and sentimental--they should have the money because we should nurture the communitarian impulses of their parents. Well, something to that--but only to the point of passing on a decent home and a nest egg, not a bloody fortune. And consider this--taxes are going to happen. Which would you rather, income taxes, payroll taxes, corporate taxes, regressive consumption taxes, sin taxes--or taxes on dead people who no longer have much standard of living to threaten? Conservatives never seem happy about income taxes; always worrying that people won't bother trying to make money if they don't get to keep it all. And they hate corporate taxes. Not big on sin taxes either, especially the libertarian rightists. Neither the left nor the right seems to like payroll taxes much, at least in theory--funny how common they are. Regressive taxes suck. Or, you can reduce all those other bad things by taxing dead people. How anyone can be against that is utterly beyond me. Defending people's right to inherit fortunes they never earned at the cost of everyone who's actually working for their money just boggles my mind.
From: Caithnard College | Registered: Nov 2002
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Anchoress
rabble-rouser
Babbler # 4650
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posted 14 May 2004 07:56 PM
quote: Originally posted by Rufus Polson: I'm solidly with Mr. Cromwell here.Defending people's right to inherit fortunes they never earned at the cost of everyone who's actually working for their money just boggles my mind.
What's your definition of 'earned'? How can you say that a child doesn't earn her or his inheritance? Do they have to get a T-4 slip from their parent before you'd buy it? And how is it at the expense of 'everyone who's actually working for their money'? If people only deserve what they earn, then how can you say that people who are 'actually working for their money' are any more entitled to the profits from inheritance tax than the so-called non-earning offspring?
From: Vancouver babblers' meetup July 9 @ Cafe Deux Soleil! | Registered: Nov 2003
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Anchoress
rabble-rouser
Babbler # 4650
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posted 14 May 2004 08:50 PM
quote: Originally posted by 'lance:
Because a child does nothing to earn his or her inheritance. It's the luck of the draw. If you're fortunate enough to be born to wealthy parents, you'll get an inheritance.
Yes, but what I'm asking is, how do you know the child doesn't work for it? It may be the luck of the draw to whom they ended up being born, but that doesn't mean that they haven't done anything to earn their inheritance. If I get paid 3x the wage you get for the same work because I work for my daddy, are you going to ask me to cough up the difference? What if I work for my parents in ways that don't end up on my tax return? Does that count for something? If so, how much?
From: Vancouver babblers' meetup July 9 @ Cafe Deux Soleil! | Registered: Nov 2003
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'lance
rabble-rouser
Babbler # 1064
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posted 14 May 2004 08:56 PM
quote: If I get paid 3x the wage you get for the same work because I work for my daddy, are you going to ask me to cough up the difference?
Then that's not an inheritance. That's just privilege. I'm talking about an inheritance properly so-called: a wealth transfer upon death. quote: Isn't an inheritance tax "double-dipping"? I mean, if I inherit my parents' estate, didn't they already pay taxes on their earnings the first time?
If we can believe Michael Kinsley of Slate -- and admittedly he's talking about the US case -- practically none of the weath subject to the US estate tax was taxed in the first place. [ 14 May 2004: Message edited by: 'lance ]
From: that enchanted place on the top of the Forest | Registered: Jul 2001
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Anchoress
rabble-rouser
Babbler # 4650
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posted 14 May 2004 09:10 PM
Sorry, I'm not making myself very clear. My point is that measuring work by a T-4 slip when family is involved is too simplistic. Of course if I work for my family for a formal 'wage' that's higher than what someone else would get it's just privilege - but IMO the same can be applied to inheritance, because you can't put a price on familial interactions.I guess what I'm trying to say is what's the difference between the extra money I earn because of fortuitously working for my family, and the extra money I inherit because of fortuitously being part of a family? If there's no difference in the work you do vs the work I do, but I get 200% more for it just because I'm related to my boss, then why can't I get X money (in both cases it's basically 'free' money, not *worked for* by your definition) from that same person even though I'm not formally 'employed' by him/her? What if I've done a *lot* to 'earn' the money, but it wasn't part of a formal employment arrangement? And BTW you haven't answered a bunch of my questions from previous posts.
From: Vancouver babblers' meetup July 9 @ Cafe Deux Soleil! | Registered: Nov 2003
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'lance
rabble-rouser
Babbler # 1064
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posted 15 May 2004 02:08 PM
quote: I guess what I'm trying to say is what's the difference between the extra money I earn because of fortuitously working for my family, and the extra money I inherit because of fortuitously being part of a family? If there's no difference in the work you do vs the work I do, but I get 200% more for it just because I'm related to my boss, then why can't I get X money (in both cases it's basically 'free' money, not *worked for* by your definition) from that same person even though I'm not formally 'employed' by him/her?
Well, earned income derives from productive economic activity, and includes things like wages, salaries, tips, and commissions. Everything else -- including interest, dividends, rent, gifts, and inheritance -- is unearned income. Assuming for the moment that economic growth is a Good Thing (a discussion which belongs in a whole 'nuther thread altogether), then I see nothing wrong with society, by means of government, encouraging economic growth by taxing earned income less heavily than unearned. Now, if we're both working for your daddy, and I'm presumably getting a market wage while you're getting twice or three times the money or something, then the difference is a gift -- "fortuitous," as you put it. Of course, there's likely no practical way for the government to tax that as anything other than ordinary income, even assuming you or your daddy declare it. And given the ingenuity of the tax lawyers who work for the wealthy, I wouldn't advise the government to waste time trying to find a way. But none of that changes the principle. On the other hand, at a person's death it's easy to tally up their assets and apply an appropriate tax. But by "appropriate tax," I'm not talking about seizing people's houses or farms or businesses or whatever. This isn't Dr. Zhivago. (When you ask quote: What if I work for my parents in ways that don't end up on my tax return? Does that count for something? If so, how much?
I guess you're talking about helping them build up a business or farm or whatever. But I can't answer the question unless you're more specific). I'm talking about limiting truly massive intergenerational transfers of wealth, the kind that maybe 1% of the population is capable of making. Society also has a legitimate interest in preventing the growth of a class of idle rich. If nothing else, they're not good for the economy. Incidentally, the estate tax has been repealed in Canada. [ 15 May 2004: Message edited by: 'lance ]
From: that enchanted place on the top of the Forest | Registered: Jul 2001
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Michelle
Moderator
Babbler # 560
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posted 15 May 2004 02:58 PM
What about people (usually women) who offer their free caregiving services for the last several years of someone's life because they're family? Society runs on this (usually feminine) free labour - it would collapse without it. For instance, my aunt has been caring for my grandparents for the last 5 years, and likely will until both are gone. She's got no money whatsoever, and my grandparents have a modest amount that they will likely be leaving. I wouldn't begrudge my aunt that money. She's earned it, not by virtue of her existence as a daughter, but because of what she has contributed to their lives during their final years.However, our inheritance laws aren't set up to recognize that, and I am in general against inheritance. As someone else said, if you want to give stuff to your kids while you're still alive, go for it, but after you're dead, if they're adults, they should be on their own, like everyone else. If everyone really DID have to earn their money through work and not just poor people, there would be a heck of a lot more support for social safety nets than there is now when upper-middle-class and rich people can just transfer their wealth from generation to generation as their unearned "safety net", while turning up their nose at the idea of poor people having an unearned "safety net" provided for them.
From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001
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DrConway
rabble-rouser
Babbler # 490
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posted 27 May 2004 02:45 AM
Now that this has been dug up due to the estate transfer tax discussion re: the NDP proposal, I'd like to amplify and clarify my statement about "feudalistic" wealth distributions.Characteristic of feudal systems of socioeconomic relations is that their wealth and income distributions are easily correlated with who gets born in what family. If your dad owned the hugest castle and could command the largest army, it would be virtually guaranteed that you could too. If your dad was a serf, you would be one too. 99.99999% guaranteed. A feudalistic wealth distribution effectively freezes mobility in a society in its tracks, because the concept of redistribution of that wealth through taxation is nonexistent, and the entire legal structure of that society further reinforces the perpetuation, forever and ever, of familial wealth-holdings, so that children of families simply continue to benefit from and accumulate wealth without ever facing the prospect of losing what they never really earned in the first place. --- Addendum to students of Medieval history: Yes, I know my summary above is probably quite an oversimplification, but if you will save your nigletizing for private-messages, it will be appreciated. [ 27 May 2004: Message edited by: DrConway ]
From: You shall not side with the great against the powerless. | Registered: May 2001
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clockwork
rabble-rouser
Babbler # 690
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posted 27 May 2004 06:48 AM
quote: Originally posted by Michelle: However, our inheritance laws aren't set up to recognize that, and I am in general against inheritance. As someone else said, if you want to give stuff to your kids while you're still alive, go for it, but after you're dead, if they're adults, they should be on their own, like everyone else.
What happens if I would like my kids to have my money but, like normal people, I want first dibs. Are you suggesting that I (or rather, my estate) should take a tax hit simply because I can't forecast the exact date of my death and budget appropriately?
From: Pokaroo! | Registered: May 2001
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Mr. Magoo
guilty-pleasure
Babbler # 3469
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posted 27 May 2004 10:25 AM
quote: As someone else said, if you want to give stuff to your kids while you're still alive, go for it
Isn't this the classic "One day all this will be yours" speech, essentially? Isn't a will the act of giving your estate to your children (or other beneficiaries) while you're alive?
From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002
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Mr. Magoo
guilty-pleasure
Babbler # 3469
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posted 27 May 2004 02:35 PM
How about a show of good faith from the NDP in the form of exempting a primary residence. As was fully discussed on the first thread on the inheritance tax, the cutoff could indeed affect regular middle-class folk who just happened to purchase their house in a soon-to-be trendy or desirable area. Exempting the house would exempt them for sure, since they don't actually have $1,000,000 sitting around.
From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002
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HalfAnHourLater
rabble-rouser
Babbler # 4641
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posted 27 May 2004 03:09 PM
quote: Originally posted by Mr. Magoo: How about a show of good faith from the NDP in the form of exempting a primary residence. As was fully discussed on the first thread on the inheritance tax, the cutoff could indeed affect regular middle-class folk who just happened to purchase their house in a soon-to-be trendy or desirable area. Exempting the house would exempt them for sure, since they don't actually have $1,000,000 sitting around.
No problem there, as long as golf carts are classified as essential goods so's I can make it to the West wing before sundown; Geeves pass the maritini. I do agree that primary residence could be exempted. Besides, this is not only a problem with inheritance but also with market value assesment taxes. You buy a house, 30 years later it's in a 'trenty' neighbourhood and now even though you're not one of the 'new' young professional homeowners raking in over 100K a year you get taxed on the porperty as though you were. Would it not be better to have universal across the board property tax changes, howeverm, as soon as a property is sold or 'inherited' it becomes subject to market value tax assesment fo the 'new' owners. [ 27 May 2004: Message edited by: HalfAnHourLater ]
From: So-so-so-solidarité! | Registered: Nov 2003
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Rufus Polson
rabble-rouser
Babbler # 3308
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posted 27 May 2004 04:31 PM
I just don't get it. We tax goods, we tax services, we tax incomes, we tax benefits, we tax capital gains, we tax property. What on earth makes any of that stuff more moral to tax than inheritances? Sorry, but all this whingeing about the possibility of being taxed on getting given a stack of cash and/or property makes me go all . Cry me a goddamn river. So the nice windfall happens to be from your parents. Big fat hairy deal; lots of people work in family businesses, too--should they not have to pay tax on that income?Most of the world manages it. It's a tax that by definition will not impose any major hardship on anyone, because it can only reduce the positive impact of a windfall, not hurt people when they're down. It hits the rich primarily; while it may occasionally hit an upper-middle-income person, or rather an heir of same, on a small chunk of their inheritance, that's still a far cry from where the average taxation burden is sitting. It has the very useful social effect of curtailing the massive accumulation of wealth from generation to generation, which over the long term is what builds inequality, steepens class structures, and reduces class mobility. And it'll raise billions a year in revenue. And against this, people are saying that some upper middle class people might have to pay some of this tax, and also they feel very sentimental about inheriting every last cent their parents want them to have. And that seems to be it. Good Gravy! You could mount better arguments than that against practically any tax in existence, and (as Skdadl has so cogently pointed out) every user fee. On Anchoress'--you know, life is not capable of being utterly and completely fair. We can work towards it on average. There are doubtless cases where heirs worked hard with their family and deserve a return for their hard work--a return which their rich family refused to give them at the time. There are also plenty of cases where people were born of rich parents and did not lift a finger, but will be inheriting tons o' cash anyway. Then there are kids of working class parents who had to work hard all their lives to help their parents keep the family off the streets, and will be getting bugger all inheritance whether taxed or not. I find it hard to envision a tax law which would be capable of telepathically assessing the hardworkingness of people and automatically assessing tax in inverse proportion to how hard they worked. People in featherbedding jobs for $50/hour but only working 10 hours a week will be taxed the same as people who work a vicious slog for 50 hours a week at pay ending up $10/hour. Is it fair? No. Tax laws are capable of having an average impact in certain directions, but are not capable of acting as judges guaranteeing that everyone in all situations gets precisely what they deserve. On average, people who inherit money didn't do any more to deserve inheriting money than people who don't inherit money. So yes, on average, an inheritance tax is a tax on people who don't particularly deserve any money, but get money just for being there. In any given case, they may have done more than just be there--but then in any given case, so might someone who's not inheriting anything. [ 27 May 2004: Message edited by: Rufus Polson ]
From: Caithnard College | Registered: Nov 2002
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Raos
rabble-rouser
Babbler # 5702
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posted 27 May 2004 04:44 PM
quote: the cutoff could indeed affect regular middle-class folk who just happened to purchase their house in a soon-to-be trendy or desirable area.
This makes it sound like people are getting penalized for having a wealthy estate. If I were to die, and pass on an estate worth .9 million, untaxed to my child, and say my brother's estate, due to say buying a cheap house increased in value exponential leaves an estate worth 2 million untaxed, that now has some of it skimmed off, my brothers child still inherits more than my child. Its not like the inheritance tax would take everything over 1 million, or competely everything if its worth over 1 million. quote: What about people (usually women) who offer their free caregiving services for the last several years of someone's life because they're family? Society runs on this (usually feminine) free labour - it would collapse without it. For instance, my aunt has been caring for my grandparents for the last 5 years, and likely will until both are gone. She's got no money whatsoever, and my grandparents have a modest amount that they will likely be leaving. I wouldn't begrudge my aunt that money. She's earned it, not by virtue of her existence as a daughter, but because of what she has contributed to their lives during their final years.
First of all, if you inherit over a million from 5 years worth of 'unpaid' labour, then I'd say you're making a fair bit of money. If instead of it being 'unpaid' and given through inheritance, and instead set up as a 'salary' system where you got paid over the term of caregiving, you can bet that you'd have been taxed a hell of a lot more, even if we had a conservative government with the taxes they're proposing.
From: Sweet home Alaberta | Registered: May 2004
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DrConway
rabble-rouser
Babbler # 490
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posted 28 May 2004 02:40 AM
Here's the difference:You choose entirely by yourself to get that alcohol or pack of smokes. That is something entirely in your control, so carping about the tax is justified. Carping about the estate transfer tax is wholly unjustified in particular because who your parents are/were, and how well they saved all that dough is entirely outside your control. After all, I don't suppose you were around before you were born to wave your finger and say "ah-HA! I'm going to be in THAT sperm/egg!"
From: You shall not side with the great against the powerless. | Registered: May 2001
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Mr. Magoo
guilty-pleasure
Babbler # 3469
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posted 28 May 2004 10:18 AM
quote: You choose entirely by yourself to get that alcohol or pack of smokes. That is something entirely in your control, so carping about the tax is justified.
Huh? You're saying it's more appropriate to whine about something that you can choose not to participate in than about something you can't? If you don't like the tax on a bottle of Jack Daniels, don't buy the bottle of Jack Daniels. As you say, you have a choice.
From: ø¤°`°¤ø,¸_¸,ø¤°`°¤ø,¸_¸,ø¤°°¤ø,¸_¸,ø¤°°¤ø, | Registered: Dec 2002
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