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Starfirenv (< 20)

A Nugget For The Parents and Dimes For The Kids-"Father and Daughter"

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January 08, 2011 – Comments (15) | RELATED TICKERS: TE , ENS

As the parent of two idealistic teenagers, I really enjoyed passing this bit of wisdom on and hope some other Fools choose to do the same. Warning- Not investment related.

                                             Father and Daughter
A young woman was about to finish her first year of college.  Like so many others her age, she considered herself to be very liberal, and among other liberal ideals, was very much in favor of higher taxes to support more government programs, in other words redistribution of wealth. She was deeply ashamed that her father was a rather staunch conservative, a feeling she openly expressed.  Based on the lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his. One day she was challenging her father on his opposition to higher taxes on the rich and the need for more government programs. The self-professed objectivity proclaimed by her professors had to be the truth and she indicated so to her father.  He responded by asking how she was doing in school. Taken aback, she answered rather haughtily that she had a 4.0 GPA, and let him know that it was tough to maintain, insisting that she was taking a very difficult course load and was constantly studying, which left her no time to go out and party like other people she knew.  She didn't even have time for aboyfriend, and didn't really have many college friends because she spent all her time studying. Her father listened and then asked, “How is your friend Audrey doing?”
  She replied, “Audrey is barely getting by.  All she takes are easy classes, she never studies and she barely has a 2.0 GPA.  She is so popular on campus; college for her is a blast.  She's always invited to all the parties and lots of times she doesn't even show up for classes because she's too hung over.” Her wise father asked his daughter, “Why don't you go to the Dean's office and ask him to deduct 1.0 off your GPA and give it to your friend who only has a 2.0.  That way you will both have a 3.0 GPA and certainly that would be a fair and equal distribution of GPA.”The daughter, visibly shocked by her father's suggestion, angrily fired back, “That's a crazy idea, how would that be fair!  I've worked really hard for my grades!  I've invested a lot of time, and a lot of hard work!  Audrey has done next to nothing toward her degree.  She played while I worked my tail off!” The father slowly smiled, winked and said gently, “Welcome to the conservative side of the fence.” If anyone has a better explanation of the difference between conservative and liberal or progressive or neocon I'm all ears.

15 Comments – Post Your Own

#1) On January 08, 2011 at 2:08 PM, HarryCarysGhost (99.78) wrote:

Nice!!!

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#2) On January 08, 2011 at 3:37 PM, Teacherman1 (51.09) wrote:

I will have to save that for later.

I once heard it said, a man who was not a liberal at 21, had no heart, and a man who was not a conservative at 40, had no head.

I prefer to be a liberal/conservative. That's the kind of conservative who is willing to help others, but gets to choose who, instead of the Govt. doing it for him.

Have a nice weekend. 

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#3) On January 09, 2011 at 4:16 AM, checklist34 (99.80) wrote:

that is so awesome that I almost can't believe it. 

it is neck and neck with that old story about 5 guys who go to lunch and all pay according to income, and then when the restaurant owner gives them all a gift certificate the guy who had never paid a dime for anything throws a huge fit because the rich guy who paid for it all got a bigger certificate than him...

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#4) On January 09, 2011 at 4:32 AM, SockMarket (87.07) wrote:

star,

I would argue that this is very, very simplistic. 3 counter arguements from a "liberal" (for the record I am for both decreased gov't involvement, although this does have some major exceptions, and increased taxes, especially on the rich; I think we need a bit of both to balance the budget)

1) This assumes that those who have more worked for it, which is generally not the case. Due to compounding generally the uber rich gain wealth for this reason alone, and/or for being able to pay someone to manage their money for them and do well with it. This would be like the girl being able to party because she just stuck her 100.0 GPA credits in a bank at 4% and got a 4.0GPA every year with no work, whereas Audrey does a reasonable amount of work and pulls, say, a 3.0.

2) It seems to be a common ultra-conservative line that those on the receiving end of major government services are deadbeats. This is certainly true in some cases and certainly not in others. While I am not in favor of the "have 25 kids and make a living off welfare" people, in fact I would very much like to cut off their welfare, I see no reason not to continue it, or increase for those who are trying their best, but just can't pull themselves up with what they have. To go back to your model, this is like a situation in which Audrey is a bit thick and can't really get above a 2.0, even though she is trying quite hard. the other girl breezes through with a 4.0. It really wouldn't kill her to give 0.2 of her GPA to Audrey, and Audrey could really use it, but she would hardly miss it

3) Given that not everyone on the bottom of the economic ladder is a deadbeat, even if the super rich do work a bit harder to earn their money, there is no reason they need all of it. The idea that one person can ever need more than, say $5m to live well for an entire life, fund their kids, etc. is ludicrus. When you think of what the money from someone who has, say $100m could do for thousands of teachers I have a very difficult time understanding why someone should be allowed to hold that extra $95m while teachers everywhere are struggling to retire by 62. (for the record I don't advocate a 100% tax on everything over $5m)

 

This ought to be an interesting debate...

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#5) On January 09, 2011 at 12:05 PM, Starfirenv (< 20) wrote:

@ #1- Thanks John. I'll be rooting for your Bears today.
@ #2- Teacherman1. Yes Sir, and well put. Perspective does change. < I prefer to be a liberal/conservative. That's the kind of conservative who is willing to help others, but gets to choose who, instead of the Govt. doing it for him.> Amen. Thanks.
@ #3. Checklist. Glad you enjoyed this. Teens have virtually zero life experience but have it all figured out. The trick is to take a complicated concept and put it into terms they can relate to. Like the old saying "I wish I had these problems at 18 when I knew it all." Teacherman nailed it with the 20/40 quip and I am guilty as charged.
@ #4. Oh Daniel- Where do I start. No argument on "very, very simplistic"- therein lies the beauty. I do agree with much of your thinking, however, I would rather have this discussion in about 20 yrs. As you know, I have a daughter a yr younger and a yr older than you and it is fruitless to try to change ones thinking at that age. I will respond to point #3- "The idea that one person can ever need more than, say $5m to live well for an entire life, fund their kids, etc. is ludicrus."  [Sic] It's ludicous by the way. C'mon Dan. $5M used to be a lot of money. I've been on boats that cost more than that. Many homes cost more than that. You are saying that no one should be "allowed" to live beachfront in Kona. Visit a few third world countries and I you may want to rethink the meaning of "need". 2000 calories/day is all you really "need".
You say " I have a very difficult time understanding why someone should be allowed to hold that extra $95m..." OK, I have 4 cars and 3 motorcycles. Should that not be "allowed" since some have no cars or motorcycles? Thoughts? Wait, let me guess- that's different. Best to you Dan and all- Except the spammers!!!

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#6) On January 09, 2011 at 1:42 PM, binve (< 20) wrote:

Starfire, that is an awesome story! Thanks for sharing man!

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#7) On January 09, 2011 at 2:05 PM, Starfirenv (< 20) wrote:

B-Man- This could come in handy for you in about 15 yrs when you change from Godlike to clueless in the eyes of Little BinVette. It happens pretty quick but unwinds very slowly. Kinda' like Teacherman's 20/40 thing. Such is the path of life.

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#8) On January 09, 2011 at 2:42 PM, HarryCarysGhost (99.78) wrote:

I'm writing this during commercials of the qouth the Ravens vs' the Cheiftans game. Bears have the bye(woohoo!)

Dan, I don't understand why any one would say that the uber rich should pay more than their fair share.

I'm all for a flat tax maybe 17.5% outoffoccus has some nice blogs about taxes and shes a CPA so I tend to listen.

Just get rid of the tax code, everyone would be on the same playing field. Sorry if I'm simplistic, but I'm a simple kind of man. No labels attached. 

 

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#9) On January 09, 2011 at 3:35 PM, Starfirenv (< 20) wrote:

John- I missed where Daniel said " the uber rich should pay more than their fair share." According to this story, the top1% control 42% of the wealth and the top 10% control 93%. The "bottom" 80%- 7% of the wealth. You would have to go back to the Great Depression to find such a seperation. I agree with the flat tax concept however an entire industry has been built around our insane tax codes, from the Fed auditors, and Examiners to the tax Lawyers, Accountants, preparers etc. What would become of these minions of bean counters, pencil pushers and litigators if they had to get a real job? I liked Ron Paul's idea- put all of the Congress and Senate in a room with the 2 foot tall stack of tax codes (and no Accountants) and make them stay there until they finish. THEN maybe something would change. The lobbyists would never "allow" this.
  The story- and a pretty good site:
http://www.mybudget360.com/top-1-percent-control-42-percent-of-financial-wealth-in-the-us-how-average-americans-are-lured-into-debt-servitude-by-promises-of-mega-wealth/

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#10) On January 09, 2011 at 3:44 PM, SockMarket (87.07) wrote:

Star,

your younger daughter is actually my age (im guessing), I skipped a grade so I am 17...

I would argue that yes, 2000 calories for several thousand people for a few years is alot more important than a yacht or mansion in Malibu for 1 person. 

I don't think that stripping all of their extra money is the way to go, then there would be no incentive to accumulate it in the first place. If I had my way I would tax those who made more than, say, $5m/yr (CG+salary) at 60% or so. While, perhaps cutting taxes on charitable jobs that are hard work, but don't pay well (ie teaching, etc.) That way:

1) the economy would improve. It would put more money in the hands of the middle class, and the % of income spent is higher for the middle class than the rich

2) the rich would still be able to buy their yachts and mansions but it would not be nearly as grand as before. Frankly I see no reason why anyone should have an extra few houses while people who are working just as hard and earning less are having a hard enough time getting one, which is probably 1/2 the size and grandeur of one of the posh home, at best.

 

Mr. Ghost,

first off, as a Steelers fan I am deeply dissapointed in the Chiefs' play... Hopefully they can come back but I kind of doubt it at this point. :(. gl to your Bears though...

My argument against a flat tax as proposed by oof is fiscal/societal:

- societies almost inevitably collpase when the middle class is severely weakened. A flat tax very naturally will increase the wealth of the rich because they get to keep more and they can compound their greater storehouse of wealth to suck in more of the pot than they already do. The rich getting richer is shrinking the middle class now, I can't imagine this would slow the problem

- at 17.5% tax revenues would drop tremendously. People are noticing how large the debt is now, if we don't start to reverse this we will wind up going down the same road as Europe, and yet tpeople want to reduce taxes. I don't doubt that spending needs to be cut, but due to our deficit at the moment we can ill afford to chop revenue. 

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#11) On January 09, 2011 at 3:46 PM, SockMarket (87.07) wrote:

sorry for the miserable grammar, etc. I was writing a bit faster than I should have been.

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#12) On January 09, 2011 at 4:34 PM, Starfirenv (< 20) wrote:

Daniel- She will be 17 on 2/2. I absolutely agree with you on the middle class. Did you read the link above?
  Also, I think a premise of the flat tax is that all loopholes go away. I'm pretty sure revs would be up huge. Didn't Warren B complain that the "ubers", including himself, pay nowhere near "fair share".
  So Dan, should I be allowed to keep my toys?

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#13) On January 09, 2011 at 4:49 PM, HarryCarysGhost (99.78) wrote:

Mr. Sock In my mind if the uber- rich actually paid the taxes at a flat rate, that should be fair enough. But we all know that many do not, schecanary is involed.

So if all the little tricks were removed it should be enough.

(Of course we know that it never will be thanks to politicions and-)

http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405

 

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#14) On January 09, 2011 at 5:26 PM, HarryCarysGhost (99.78) wrote:

Here's another example-

As Goldman Sachs Posts Record Profits, Matt Taibbi Probes ...

I've seen this from other sources. So pretty sure it's legit.

Mark- that is the question?

 I agree with the flat tax concept however an entire industry has been built around our insane tax codes, from the Fed auditors, and Examiners to the tax Lawyers, Accountants, preparers etc. What would become of these minions of bean counters, pencil pushers and litigators if they had to get a real job?

I don't have an answer to that, I would think with the amount of taxes that I pay, my gobernment is on the case ; )

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#15) On January 09, 2011 at 9:19 PM, SockMarket (87.07) wrote:

star,

I didn't see the link before; I think you posted that just after I started writing. The guy sounds a bit angry, and I think a few of his conclusions are off (ie all or most of the richest 10% are happy with the economy, etc.) but it was an accurate article in general. Also agreed as to the problem you posed for the flat tax system.

If I remember the quote correctly Buffett was complaining that he paid 17% while his employees paid 30%+ taxes; he thought that was ridiculous since he made quite a bit more money than his employees.

I would say that, yes you do get to keep your toys :) no matter what. Although if you are raking in a ton of dough you may have to pay alot more taxes. 

I don't think a flat tax would raise revenue, everyone will still use the new system's accounting methods to reduce their total income, as the lower your income the less you pay in taxes. Seeing as I think the effective tax rate is around 25% now (don't quote me on this) at 17.5% I find it hard to believe that revenue would really improve. 

 

Mr. G,

I hate goldman as much as the next guy, If I saw their hq on fire I would probably grab a beer and watch, and maybe cheer a little, but I don't think you can blame all problems, and underhanded government spending on them. Like many conspiracy theories out there, the roots of what spawned the theory are likely true, but the theory itself is inaccurate or dirastically overblown. 

Not that this falsafies what they said any, but the interview was from the fellow who wrote the initial article, and listenting to him gives me a very low level of confidence that he actually understands economics. 

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