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Proposed Bush Tax Cuts Benefit Rich

Discussion in 'BBS Hangout: Debate & Discussion' started by Jeff, Aug 7, 2000.

  1. Jeff

    Jeff Clutch Crew

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    From the Chronicle:

    Bush's tax-cut proposal gives bulk of benefits to the rich
    By GARY KLOTT
    Tribune Media

    GEORGE W. BUSH'S tax-cut proposals drew loud cheers from delegates to the GOP National Convention. But as the focus shifts to the Democratic convention, the Bush tax plan is certain to prompt partisan debate over the cost of the tax cuts and the way the tax benefits are distributed among income groups.

    Close scrutiny shows the plan's costs are greater than advertised and that higher-income groups would receive a disproportionate share of the benefits.

    Bush's sweeping tax plan would provide an across-the-board cut in tax rates; double the size of the child tax credit; reinstate a deduction of up to $3,000 for two-earner couples; offer a charitable deduction for taxpayers who don't itemize deductions; expand education IRAs; abolish the estate tax; create a tax credit for lower-income individuals to buy health insurance; and provide new tax breaks for long-term care.


    Understated price tag

    Although Bush boasts that his plan would provide much more tax relief than Vice President Al Gore has proposed, the Bush campaign downplays the revenue impact of its proposed cuts. The Bush campaign typically advertises a price tag of $460 billion over five years. But that figure substantially understates the plan's actual cost. For one thing, tax legislation and budget surplus projections are typically measured over a 10-year period in Congress. What's more, the five-year price tag substantially underestimates the actual cost of the plan because the tax cuts are phased in slowly over many years, with the largest cuts coming after the first five years.

    As a result, the 10-year cost of the plan is more than triple the five-year estimate at nearly $1.6 trillion. That figure is based on projections made of most provisions in the Bush plan by the Congressional Joint Committee on Taxation. Congress relies on the joint committee's professional staff to provide nonpartisan technical analysis and revenue estimates of tax legislation.

    The $1.6 trillion estimate of the Bush tax cuts is twice the size of the Congressional tax-cut plan that President Clinton vetoed last year and triple the size of Al Gore's $500 billion tax-cut proposal.

    But even the $1.6 trillion figure understates the plan's cost after the first 10 years. Because the tax cuts are phased in gradually, the annual cost grows larger each year.

    The size of the Bush plan has been and is likely to remain the most frequent target of criticism by Democrats. In response to Bush's acceptance speech at the GOP convention, the Gore campaign issued a statement repeating its criticism of the Bush plan, saying it would spend the entire budget surplus and that it "leaves no money for any other important investments and could force cuts into programs such as Medicare and Social Security."


    Income distribution

    Another source of criticism is the distribution of the tax cuts among income groups. The Bush campaign contends the tax cuts "would especially benefit lower- and middle-income families."

    But in dollar terms, the bulk of the tax cuts would go to the highest-income groups.

    Official projections by the Joint Tax Committee show that more than half the tax cuts in the year 2005 would go to taxpayers with six-figure incomes. The Joint Tax Committee didn't release any breakdown beyond 2005. But the share of tax cuts going to the highest-income groups would grow even larger in subsequent years when the provisions that benefit the affluent become fully effective.

    When the provisions are in full effect, nearly 60 percent of the tax cuts would go to the top 10 percent of taxpayers, for an average cut of $6,410 a year, according to projections by Citizens for Tax Justice, a liberal research group whose revenue estimates are widely respected. By contrast, the bottom 60 percent of taxpayers would receive less than 13 percent of the tax cuts, averaging $227.

    The analysis found that the tax cuts would be most concentrated among the wealthiest. The richest 1 percent of Americans would receive 42.6 percent of the tax cuts, averaging $46,072 a year.


    Closer scrutiny

    At first glance, the Bush tax-cut proposals seem to offer more equitable distribution than the revenue estimates show. For instance, the centerpiece of the plan is a provision that would cut tax rates for all income groups. Rates now range from 15 to 39.6 percent. Under the Bush plan, the top rate would be cut to 33 percent; the 31- and 28-percent rate brackets would be reduced to 25 percent; and a new 10-percent bracket would be created for the first $12,000 of taxable income on a joint return ($6,000 for singles and $10,000 for heads of households).

    But the rate cuts would disproportionately benefit the wealthiest because those in the top brackets would benefit from the rate cuts in all brackets and because the tax cuts in dollar terms are biggest at the highest-income levels.

    Another major provision that skews the benefits toward the wealthy is the proposed repeal of the estate tax, which affects fewer than 2 percent of those who die.

    Parents with incomes in the low six-figures would also benefit from the proposed expansion of the child tax credit. The child credit, which is now worth up to $500 per child under age 17, would be doubled to $1,000, and more higher-income parents would be eligible to claim it. The credit currently begins to phase out for parents with adjusted gross incomes above $110,000 on a joint return and $75,000 for single parents. The Bush plan would raise the threshold to $200,000 for both married and single parents.


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  2. Rocketman95

    Rocketman95 Hangout Boy

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    Damn Liberal media!

    [​IMG]

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    visit www.swirve.com
     
  3. RocketMan Tex

    RocketMan Tex Contributing Member

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    What?!?

    Another Republican-touted taz cut that benefits the rich over everyone else?!?!?

    I'm astonished...NOT!!

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    Bring It!!
     
  4. 4chuckie

    4chuckie Member

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    Estate taxes- Yes they benefit the rich but also farmers, including family farms who are not fortunate enough to understand estate planning. When the farmer dies now the first $700,000 or so is free the remainder can be taxed at a high rate (around 55%). So CLinton vetoes the estate tax cut and pi$$es off the farmer. Also why penalize someone for having so much when they die? Granted most of us don't need to worry about estate taxes but a 55% rate is riduculous.

    So are all married couples poor? All married couples who pay taxes would benefit.

    Charitable deductions for non-itmeizers. Is there something wrong with this? I am all for it, it could potentially increase charitable giving but I guess the liberals are so bad off they can't even give to the chariites.

    Child tax credits- So poor folks don't hjave kids huh? It would benefit everyone who has children & pays taxes. Evil republicans, these guys are nasty in this tax plan.

    Dropping the lowest tax bracket from 15 to 10% - that is purely wrong to decrease taxes, we should all give all our money to our government so those of us who work hard have less than those who work.

    All the democrats want is for their to be tax credits that give back to those who pay no, or very little taxes in the first place. I welcome a republican governemnt to bring this to an end.

    In case you are wondering the only break I would benefit from is dropping the lowest bract because I am single, no kids, already itemize, and don't have a Million dollar estate, but I think all these programs are good. Help everyone (including those of us who pay taxes) not just the folks who can't support themselves.

    Also before you believe the presses numbers be aware that the top 25% of wage earners pays 75-80% of the total taxes, so any tax break that benefits everyone would benefit people who actually pay taxes.

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  5. BrianKagy

    BrianKagy Contributing Member

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    The rich pay most of the taxes. Naturally, tax cuts are going to benefit them.

    I will follow up on this tonight when I have some particularly salient material regarding the current distribution of tax rates and income per tax bracket.

    You will lose. (think of an Ivan Drago type voice there! )

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    I didn't use the cocaine to get high, I just liked the way it smelled.
     
  6. Pole

    Pole Houston Rockets--Tilman Fertitta's latest mess.

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    ...yet a higher income taxpayer will still have a marginal rate that is higher than his "less fortunate" neighbor.

    I believe we should all pay tax at the same rate.

    I don't mind paying 30%(x) in taxes when my neighbor who earns half of what I make only pays 30%(1/2)(x) in taxes. I've even convinced myself that I don't mind that my neighbor will receive an equal (likely more) share of the benefits even though he pays only half of what I do for his share--even though I deplore the thought of "income redistribution." But I loathe the thought that not only do I pay more dollar wise in taxes, but that I even pay at a higher rate.

    I don't believe these proposed tax cuts "benefit the rich" enough.

    Maybe I should only put in 15 hours a week instead of 50-60--after all, my government gives me plenty of incentive.

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    stop posting my damn signature
     
  7. Redglare

    Redglare Member

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    4Chuckie-

    The family farms are privy to both a qualified family owned business exclusion and lifetime exclusion of up to $1,300,000. Therefore, anything above that number will begin to be taxed at an 18% rate. Of course, this rate quickly increases, but hits 55% only when the taxable estate (after exclusions) meets the $3,000,000 threshold.

    The elimination of the estate tax is the biggest issue most Democrats have with Bush's plan. It has the biggest price tag, and clearly only affects the rich. My opinion is that the other items, including elimination of the marriage penalty, are token parts of the plan, and would need to be addressed by either side eventually.

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  8. 4chuckie

    4chuckie Member

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    Redglare thanks for the correction - I am a CPA and do some taxes but I don't do estate planning & have no Ag clients, although my regular job is ag related, so I don't claim to be an expert in valuations at all.
    But for farms there are often cases (that usually get a lot of press) where the land is highly valuable and a a result either the entire farm or a portion of it must be sold after a death. Especially for land near suburbs where land prises have risen with the growth of the city a few thousand acres of farm land could easily be appraised at the 3 million level. Many times the courts must intervene to determine the value (FMV vs actual use value)but without proper estate planning it does happen.
    But a better question may be why should the government benefit from someone dying, rich or not? Yeah estate planning can minimize or eliminate much of this but I don't understand the goverenments rationale of taking from a deceased person.

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  9. BrianKagy

    BrianKagy Contributing Member

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    This is an old, old misconception. I will defer to our resident Clutch City CPA, Redglare, to either shoot me down or agree, but the idea of the rich magically using tax shelters and charitable foundations to avoid paying all but a fraction of their taxes is a myth-- or at least, extremely uncommon.

    According to the Wall Street Journal, the top 1% of all income earners in 1996 paid-- no joke here-- 33% of income taxes. Whether you think that sounds fair or not, consider that the top 1% of income earners earned 16% of all the income that year.

    Additionally, the top 10% of income earners paid 58.5% of the income taxes but earned only 39% of the income.

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    I didn't use the cocaine to get high, I just liked the way it smelled.

    [This message has been edited by BrianKagy (edited August 08, 2000).]
     
  10. rimbaud

    rimbaud Contributing Member
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    BK,

    I have seen the estate tax, for one, manipulated with great ease.

    I posted in another thread that I have seen a ~50% tax go down to 6% total taxed.

    Why, because lawyers were hired to take care of it.

    Truth is, the wealthy do have an immediate advantage. Do they always use it? I don't know.
    What are the end percentages? I don't know.
    They can, howver, do things a poor person could never even dream of doing.

    Tax any income over 2 million at 80%!

    Ha! That will get some attention. Kelvin Cato alone could pay for a new public transit system in Houston. or improved roads, anything.

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    "The living room is the factory...

    The product being manufactured... is you."
     
  11. BrianKagy

    BrianKagy Contributing Member

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    A) Those statistics I cited came from the Wall Street Journal, which got them from the IRS. Even if we accept the flimsy premise that all the rich avoid paying their taxes, they're still contributing far more to the tax coffers than their share of the income earned would seem to make fair.

    B)
    That's the point of being rich, I think. Taking care of your family and providing for them, living your life as comfortably as possible-- I don't see anything intrinsically wrong with that.

    Nor do I think that at a certain level of wealth, you're suddenly not entitled to keep but a tiny bit of it. You're on the wrong track there. We shouldn't be taxing levels of income at progressively higher levels. We should be taxing levels of consumption at progressively higher levels.


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    I didn't use the cocaine to get high, I just liked the way it smelled.

    [This message has been edited by BrianKagy (edited August 08, 2000).]
     
  12. rimbaud

    rimbaud Contributing Member
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    BK,

    I pay more (persentage wise) in taxes than the top 1%? That sucks (my wife and I get about 40% taken away - bye bye!)

    I was mostly kidding with the 80% tax thing, but I do think that there is only a certain point where money is earned or needed. If I made 2 million a year, I could certainly survive. If I made 3 million and only was able to keep 2.1, I would still be very, very rich and have more money than I needed or could spend.

    How do you propose taxing higher levels of consumption?
    Legitimately asking - not ridiculing or anything.

    additionally, I meant that they could do things to avoid paying taxes that no poor person ever could. In other words, they can get around the law.
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    "The living room is the factory...

    The product being manufactured... is you."

    [This message has been edited by rimbaud (edited August 08, 2000).]
     
  13. Achebe

    Achebe Contributing Member

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    Mmmmm.... tax shelters.

    A bunch of motley ideas---

    After May of last year I payed 40% of my income to the government... which caused a heart palpitation looking at my depleted check every two weeks. Irregardless, I am perfectly comfortable with my arrangement. I create 'Matt' welfare by charging my clients a ridiculous rate. They write it off in some bazillion loopholes given to Corporate America. It's all good. [​IMG]

    It seems apparent to me that the tax schedule has to be balanced for the upper income brackets. Using this year's BRI tax on all bball players (10%) as an example, doesn't it seem evil that little Pig Miller has to pay the same rate out of his $50,000.00 salary that Shaq O'Neal does out of his $20M? Who really gets harmed in such an arrangement... certainly Shaq's lifestyle isn't affected.

    The republicans' tax scheme does a wonderful job of trying to empower all Americans by drastically reducing the taxes payed by each individual. Unfortunately, it seems to ignore the fact that it costs alot of money to run the government (roads, defense, paying off Reagan's defense deficit, etc.). On social issues, it seems as if the republicans' ignore what even Greenspan says in both words and deed. He criticized the tax cut as being harmful to the economy and causing inflation (hmmm... a trillion dollars on the economy, what will happen? [​IMG]). Furthermore, if the economy starts to employ 'too many people' (weird system, ehhh? do we have to have 5% unemployed for this she-ot to work?), he keeps it in check by increasing the interest rate.

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    "At one of these governors' conferences, George [W. Bush] turns to me and says: 'What are they talking about?' I said: 'I don't know.' He said: 'You don't know anything, do you?' And I said: 'Not one thing.' [Bush] said: 'Neither do I.' And we kind of high-fived."
    --Republican Gov. Gary Johnson of New Mexico shares a verbal exchange that took place between he and George W. Bush.

    (Quote is from the Los Angeles Times, 5/31/00)
    Dubyah Speaks
     
  14. 4chuckie

    4chuckie Member

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    Almu you said:
    "And this is what gets me about tax credits. For example, they are giving you a tax credit of 750 dollars if you have a child and another 1300-2000 dollars if you have more than one and make less than 21000 per year. Now, how the hell is that going to make you feel better when you just spent approximately 10,000 dollars feeding, clothing and maintaining your baby during the past year? If you make over 21000, you lose that 1300-2000 dollar kick in. So, if you make 30,000, you get 750 dollar credit. In the meantime, you spent 10 times more raising the kid over the past year on average. What relief is that?"

    Again this is an example of how the democrats want to give tax breaks (credits) to the people who don't pay many/any taxes in the first place (since it is phased out for higher earners). Having kids is a choice (if cost is a major factor in having children then it may need more thought as to if they can support the child), and that is what gets me about giving a credit for a child (there is already a deduction for each dependent).

    Also the better off do have more deductions because that is the way the system is set up. The biggest problem facing our current tax system is how to define income. Even with a proposed flat tax you must ask yourself what is income? Some of the answers are easy like the paycheck from work. Others will require defintions & rules (like what is business income, and how do you define it). Others are more complicated like in stock-options when are they income and how do you determine the taxable amount.
    Also a flat tax will never fly because as soon as the liberal media figures out that the person making minimum wage will pay a flat amount off the top they will scream bloody murder.
    Basically the surplus last year needs to be given back to those of us who actually put money in, not given to those who never contributed. I can see part of it repaid to the national debt or to secure social security but any given anywhere else needs to go back to where it came from.

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  15. dc sports

    dc sports Member

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    Do you really want the big economic theory? It could be a LONG thread. [​IMG]

    In a nutshell, there is a certain amount of natural unemployment in the system... people changing from one job to another, entering the workforce from school, people in college and not looking that hard. Natural, transient unemployment is estimated around 3-4%, depending on who you ask. Its considered natural and healthy.

    People looking for a job in a specific area is also enter into the equation -- say a chemist when chemist jobs are scarce, or a elementary school teacher with no current openings.. These people aren't helped at all by low unemployment -- they can't find a job in their profession no matter how many other positions are available.

    That means that when unemployment reaches 4-5%, the true unemployment rate could be 1% or less. When it gets this low, jobs go unfilled, turnover in jobs increses as more opportunities are available, and wages are driven up, causing prices to increase, leading to inflation. The fed would rather slow the economy down than risk getting into an "inflationary spiral."

    That's been the name of the game -- apply just enough brakes on the economy to keep it from going too fast, and burning itself out.


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    Stay Cool...
     
  16. Achebe

    Achebe Contributing Member

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    dc sports:

    I certainly appreciate the explanation... my concern is merely from a social perspective:

    If the system will not tolerate everyone being employed, then we merely need to ensure there are enough safeguards for that ~5%.

    In a simplistic sense, it is for that reason that regardless how fiscally conservative I become, and how greedy I become, and on and on...

    I will always vote for the person that I think takes the whole picture into consideration. I happen to be very lucky right now. I don't want Bush screwing with my situation right now by overheating the economy by flooding the economy w/ more money.

    p.s. who saves their tax returns? I got $10K back last year and immediately went to Europe on it (I was doing my part in overheating different economies [​IMG]).

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    "At one of these governors' conferences, George [W. Bush] turns to me and says: 'What are they talking about?' I said: 'I don't know.' He said: 'You don't know anything, do you?' And I said: 'Not one thing.' [Bush] said: 'Neither do I.' And we kind of high-fived."
    --Republican Gov. Gary Johnson of New Mexico shares a verbal exchange that took place between he and George W. Bush.

    (Quote is from the Los Angeles Times, 5/31/00)
    Dubyah Speaks
     
  17. Almu

    Almu Contributing Member

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    My friend Brian K, you can ask the resident CPA, but I know from my boss who is the CFO of the largest ad agency in the world. He tells me he would claim the wind if it was legal. I know for a fact that he pays less taxes percentage wise than I do. He knows my salary and he tells me all the tricks in the book that he does that are legal. And we do it for our world offices also during tax time. I don't think the rich should have to give up more. The poor have to give up LESS. Thats the key. Help us get to where the rich are and then you can tax us as much as you want. Until I get there, I want a bigger tax break on my mortgage or home repairs or stuff like that. I don't want a tax break on my kid. My kid isn't an expense. Its a blessing.

    Also, having the same tax advantages as the rich wouldn't be bad. Maybe they could do it percentage wise where everyone pays according to their income over 40,000. I just don't think that if you make 800 dollars a week, you take home 450 while the guy that makes a million, takes home 680,000.

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    I Want To Thank God For Making Me A Rocketfan

    [This message has been edited by Almu (edited August 09, 2000).]
     
  18. Will

    Will Clutch Crew
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    I'm basically a Democrat, but we all know that somewhere down the road, Democrats will be protesting that George Bush III's tax cut screws the poor by giving 40% of the tax relief to the richest 60% of the country.

    Huh?

    Right.

    Clinton raised taxes on the rich. The more you raise taxes on the rich, the more the rich will "benefit" from a rollback of taxes. But that "benefit" just means they can go back to paying an arm and a leg instead of two arms and a leg.

    If you want to get mad at something truly unprincipled, get mad at all the damned tax breaks for favored industries, which just happen to be owned by rich guys with well-paid lobbyists. There's no moral argument for that garbage.
     
  19. Almu

    Almu Contributing Member

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    While it is true that if you make a million dollars you pay more taxes due to the fact that your taxable income and marginal income combine to form a larger part than someone that makes 35,000. But what you DON'T realize that when you are making millions, your tax advantages and tax shelter that are available to you are not only higher than someone who makes 35,000, but more pronounced. Someone in the millions gets a bigger tax relief when it comes to their home, business and medical expenses. On top of that, they have charity shelters, off-shore accounts and the ability to hire competent accountants to put their money in bonds, t-bills, and the like to protect their money from taxation.

    As it stands now, corporate taxation in the US is based on a modified flat-rate tax, which becomes a true flat rate for the highest incomes. Personal taxation is based on the modified tax-rate with no more than 38 percent of your income going to taxes.

    In ENGLISH? The rich have advantages that you don't and no matter what anyone tells you, rich people NEVER, EVER pay more taxes than you percentage wise. And I mean NEVER if they have the competent people that we cannot afford handle their money.

    And this is what gets me about tax credits. For example, they are giving you a tax credit of 750 dollars if you have a child and another 1300-2000 dollars if you have more than one and make less than 21000 per year. Now, how the hell is that going to make you feel better when you just spent approximately 10,000 dollars feeding, clothing and maintaining your baby during the past year? If you make over 21000, you lose that 1300-2000 dollar kick in. So, if you make 30,000, you get 750 dollar credit. In the meantime, you spent 10 times more raising the kid over the past year on average. What relief is that?

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    I Want To Thank God For Making Me A Rocketfan



    [This message has been edited by Almu (edited August 08, 2000).]
     
  20. rimbaud

    rimbaud Contributing Member
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    Will,

    Couldn't agree with you more.

    Don't forget about corporate bailouts, either. I once read a statistic where 7 of the top 10 corporations in the US have been bailed out by the government at least once. They all also had big lobbies.

    Yea, that is a real free market/capitalist system for ya!

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    "The living room is the factory...

    The product being manufactured... is you."
     

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