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Old 08-19-2008, 10:38 AM   #141
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Originally Posted by Independent View Post
Utility arguments
6) High income/high wealth have more to protect, hence should/would pay more for protective services
7) Same as (6), but expanded to entire social structure

Social structure arguments
9 ) Prefer more uniform distribution of income/wealth – don’t like societies with extremes of rich and poor
10) Concentration of wealth gives excessive power to a few (this also supports wealth taxes)

Fairness argument
11) Our system generates large (unfair) differences in opportunity, progressive taxes somewhat offset this
These are the ones I disagree with, to varying degrees.

6) I dont quite understand. They have more to protect, thus should pay more in taxes? I'm not sure what you mean. People with more wealth can afford to pay for protection privately. I would guess that the wealthy would rather pay less in taxes and receive fewer services. You think the wealthy prefer more taxes for more services?
9) I strongly dislike uniform distributions of wealth. That seems like a terrible societal structure to have as a goal.
10) I'm not sure what you mean by excessive power. Influence on government? Ability to force people into involuntary contracts? Ability to circumvent the law?
11) This is an empirical claim. Has the increase in progressive taxes altered the beginning states? Has poverty decreased? Is equality of opportunity being realized, and more importantly, is progressive taxation the best way to achieve this?
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Old 08-19-2008, 11:00 AM   #142
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I mentioned earlier that I read that some countries have taxes on assets, not just income. By assets, I think they mean stock equities, because real-estate taxes are already universally proportional to the valuation.
Indeed, some countries have a "wealth tax" system in addition to an "income tax" system. In some countries I am familiar with, you pay annual taxes on your networth (assets-liabilities). Taxable assets includes cash, bonds, stocks, real estate, but also cars, jewelry, art, furniture, stamp collections...

Now I am COMPLETELY opposed to such "wealth tax". Why? Because it simply amounts to double taxation. You basically pay taxes over and over on assets you already paid property or income taxes on. It's totally unfair, it encourages legal and illegal tax evasion (Wealthy people move abroad with their assets and their income or use loopholes to conceal assets), and it discourages wealth creation.

I am still a citizen of a country with such wealth tax and I am very careful to (legally) structure my assets in such a way that I am not subjected to that stupid tax.
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Old 08-19-2008, 11:15 AM   #143
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Indeed, some countries have a "wealth tax" system in addition to an "income tax" system. In some countries I am familiar with, you pay annual taxes on your networth (assets-liabilities). Taxable assets includes cash, bonds, stocks, real estate, but also cars, jewelry, art, furniture, stamp collections...
Bold facing of the above words was mine.

I am not really for it, just wondering how it would work in practice. I am somewhat pragmatic, and can see it creating such a logistic nightmare, requiring an army of tax assessors. And the incentive for people to hide their wealth is high, necessitating another army of tax police.

My, my, my... Taxation issues have been with mankind, probably ever since the Neanderthals decided to band together in the same cave. We are not going to solve it in this forum.
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Old 08-19-2008, 11:39 AM   #144
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Bold facing of the above words was mine.

I am not really for it, just wondering how it would work in practice. I am somewhat pragmatic, and can see it creating such a logistic nightmare, requiring an army of tax assessors. And the incentive for people to hide their wealth is high, necessitating another army of tax police.

My, my, my... Taxation issues have been with mankind, probably ever since the Neanderthals decided to band together in the same cave. We are not going to solve it in this forum.
The wealth tax system I am familiar with is based on people's honest assessment of their own wealth (haha!). So you can get away with underestimating your net worth, but off course if you get caught the penalties are steep. And by the way, quite a few socialist politicians have been caught fudging their net worth for the purpose of defrauding the wealth tax system (a system they themselves created), so to me that says a lot about their somewhat hypocritical view of "social responsibility"...
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Old 08-19-2008, 12:27 PM   #145
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(why inject racial profiling into the argument anyway?)
Well it isn't really an injection, so much as a statement of historical fact. I couldn't really tell the story without it. But perhaps you are more comfortable with pure speculation, unalloyed by reference to concrete experience?

Ha
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Old 08-19-2008, 12:42 PM   #146
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I think Texarkandy should at least be paying tax on the imputed income (the market value of services rendered).
Tex may be so studly that he has never faced this demand. But as a lesser gent I have at times felt the bite of the P-tax.

Ha
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Old 08-19-2008, 12:42 PM   #147
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We shouldn't, but conversely we shouldn't be targeting them for their higher income either. I read recently (within the last year) that the trend among wealthy French citizens is to immigrate out of France because the tax rate is too high. These people leave the country also take a huge chunk of government revenue with them.
A lot of them move to the UK, which doesn't tax income earned overseas. (that's why they have a lot of Arab oil men and Russian oligarchs living in London)

But unless they renounce their French citizenship, they may not necessarily evade French taxes.

I think it's a similar situation for Americans. There is a certain exemption level but above that, I believe you pay income taxes, regardless of where you earned that income.


Certainly the rich (including rich Americans) are able to move anywhere they want. They could move to Monaco which has no income taxes (but I think the citizens get healthcare through the French system).

A lot of yachts owned by Americans spend a lot of time down there and the nearby Riviera. All they would have to do is renounce their US citizenship and stay in one of the most beautiful, expensive areas in the world.

Why don't they do it? Because despite the US taxes, there's still huge opportunities to make more money here -- and the rich who make money in Wall Street can now depend on the US govt. to socialize their losses.
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Old 08-19-2008, 01:00 PM   #148
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Tex may be so studly that he has never faced this demand. But as a lesser gent I have at times felt the bite of the P-tax.

Ha
The most ominous of taxes...
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Old 08-19-2008, 01:04 PM   #149
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Opposing arguements
Practical arguments
1) Canít get blood from a turnipDon't bite that hand that feeds you
2) Got to go where the money isThe candle that burns twice as bright burns half as long
3) Some govít spending explicitly supports the poor. Itís silly to tax the poor or lower middle for this spendingTo whom much is given much is expected

Incentive arguments
4) High earners make more per hour, consequently higher tax rates on them leave more level incentive to work[B]If businesses pay time and a half to encourage overtime; What do you suppose the government charging time and a half does?B]
5) Itís better to tax dumb luck than hard work (this may be identical to (4), or may be a ďfairnessĒ argument)Is a man not entitled to the sweat of his brow?

Utility arguments
6) High income/high wealth have more to protect, hence should/would pay more for protective servicesThe police are not their to protect you, they have no power until a crime has already been committed and you are bleeding in the streets. You must provide for your own protection.
7) Same as (6), but expanded to entire social structureThe rich send their children down private roads to private schools with their private security guards. Why should they have to pay the lions share for roads schools and social programs they will never use?
8.) Low income get more utility from marginal income, hence we increase total utility by shifting taxes to higher income The poor do not invest or create businesses with their extra income, How many jobs do ten thousand poor with an extra ten dollars each create compared to the business that could be founded from one rich person with an extra $100,000?

Social structure arguments
9 ) Prefer more uniform distribution of income/wealth Ė donít like societies with extremes of rich and poor If the punishment for not working is the same as the reward for working, who would work?
10) Concentration of wealth gives excessive power to a few (this also supports wealth taxes) Those who have the most inv

Fairness argument
11) Our system generates large (unfair) differences in opportunity, progressive taxes somewhat offset thisFewer people play the lottery when the prize is smaller
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Old 08-19-2008, 01:16 PM   #150
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Well it isn't really an injection, so much as a statement of historical fact. I couldn't really tell the story without it. But perhaps you are more comfortable with pure speculation, unalloyed by reference to concrete experience?

Ha
One time while driving on a highway, I was pulled over. No ticket given. And I am white. My hispanic friend has gotten 2 tickets, in the 2 times he has been pulled over. But he has a white last name. And he had a white passenger one of the times, and a brother with a white name as a passenger the other time. Draw your own conclusions about police. But the facts are the facts. Oh, and I was driving a Ford, and my friend was driving a Honda. And he was speeding, and I made a lane change with signaling.
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Old 08-19-2008, 01:35 PM   #151
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One time while driving on a highway, I was pulled over. No ticket given. And I am white. My hispanic friend has gotten 2 tickets, in the 2 times he has been pulled over. But he has a white last name. And he had a white passenger one of the times, and a brother with a white name as a passenger the other time. Draw your own conclusions about police. But the facts are the facts. Oh, and I was driving a Ford, and my friend was driving a Honda. And he was speeding, and I made a lane change with signaling.
:confused::confused::confused:
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Old 08-19-2008, 01:38 PM   #152
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A lot of them move to the UK, which doesn't tax income earned overseas. (that's why they have a lot of Arab oil men and Russian oligarchs living in London)

But unless they renounce their French citizenship, they may not necessarily evade French taxes.
If you have no income in France and own no assets in France, then you won't owe any taxes in France even if you remain a French citizen (as long as you pay taxes in your host country). So wealthy French citizens move with their assets to more tax-friendly places. A favorite is off course Switzerland (because of language commonality). Monaco is hard to get in. I think that the US is also a good alternative (high standard of living, relatively low income taxes, no wealth tax and reasonable cost of living).
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Old 08-19-2008, 01:42 PM   #153
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Opposing arguments
Practical arguments
1) Canít get blood from a turnip Don't bite that hand that feeds you Unless you also snap the neck?
2) Got to go where the money is The candle that burns twice as bright burns half as long and engulfs the one that burns slowly.
3) Some govít spending explicitly supports the poor. Itís silly to tax the poor or lower middle for this spending To whom much is given much is expected and who has more?

Incentive arguments
4) High earners make more per hour, consequently higher tax rates on them leave more level incentive to work If businesses pay time and a half to encourage overtime; What do you suppose the government charging time and a half does? Depends on whether the income or substitution effect predominates (never had any business pay me for overtime though)
5) Itís better to tax dumb luck than hard work (this may be identical to (4), or may be a ďfairnessĒ argument) Is a man not entitled to the sweat of his brow? Money is both individual and social.

Utility arguments
6) High income/high wealth have more to protect, hence should/would pay more for protective services The police are not their to protect you, they have no power until a crime has already been committed and you are bleeding in the streets. You must provide for your own protection. More to lose.
7) Same as (6), but expanded to entire social structure The rich send their children down private roads to private schools with their private security guards. Why should they have to pay the lions share for roads schools and social programs they will never use? Because those others vote and can assist in producing wealth or destroying it?
8.) Low income get more utility from marginal income, hence we increase total utility by shifting taxes to higher income The poor do not invest or create businesses with their extra income, How many jobs do ten thousand poor with an extra ten dollars each create compared to the business that could be founded from one rich person with an extra $100,000? More businesses are started by the poor who then become rich than the rich.

Social structure arguments
9 ) Prefer more uniform distribution of income/wealth Ė donít like societies with extremes of rich and poor If the punishment for not working is the same as the reward for working, who would work? Would be a wonderful society if we only worked at what we enjoyed. Perhaps when all basic needs are readily taken care of.
10) Concentration of wealth gives excessive power to a few (this also supports wealth taxes) Those who have the most inv At least until it is taken away.

Fairness argument
11) Our system generates large (unfair) differences in opportunity, progressive taxes somewhat offset this Fewer people play the lottery when the prize is smaller Should we be encouraging lotteries?

Seriously, this is mostly a matter of extremes. Extreme equality can be as stifling as extreme inequality. The pendulum swings between these. While taxes are slightly progressive, this hasn't hindered the accumulation of top in the slightest, so are hardly as progressive as they could be, not that there isn't a lot of waste that could be cut as well.
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Old 08-19-2008, 01:43 PM   #154
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These are the ones I disagree with, to varying degrees.

6) I dont quite understand. They have more to protect, thus should pay more in taxes? I'm not sure what you mean. People with more wealth can afford to pay for protection privately. I would guess that the wealthy would rather pay less in taxes and receive fewer services. You think the wealthy prefer more taxes for more services?
9) I strongly dislike uniform distributions of wealth. That seems like a terrible societal structure to have as a goal.
10) I'm not sure what you mean by excessive power. Influence on government? Ability to force people into involuntary contracts? Ability to circumvent the law?
11) This is an empirical claim. Has the increase in progressive taxes altered the beginning states? Has poverty decreased? Is equality of opportunity being realized, and more importantly, is progressive taxation the best way to achieve this?
Note: I listed 11 pros. If there were no cons, then even one of the pros would be sufficient reason for me to support progressive taxes. I don't need to agree with all 11. But responding on those you mentioned:

6) A person with a $1 million house thinks nothing of paying 10x as much to insure or protect it than a person with a $100k house. In fact, if you can show that the more expensive house is more likely to be targeted by thieves, then he/she would willingly pay more than 10x. Similarly, if a wealthy person and a poor person both believe they have an enemy who may harm them, the wealthy person will spend more on bodyguards. Again, the ratio might be more than 10x, as the poor person might spend zero.
I think that "private protection" only works to the extent that we have a public system as a base. Unless you really want to live in a distopia, you don't want a world of private armies.

9) Like many other things, I find the middle better than either extreme. I wouldn't want a flat distribution either, because I don't think the everyone is willing to expend the same effort. But I don't want third world distributions either.

10) Good point, because "power" is a fuzzy concept. Probably "influence on gov't, ability hire the best lawyers, control economic events". In some sense, it's also the feeling that the people who really shape the world the rest of us live in don't live in it themselves.

11) I'm not claiming that progressive taxes eliminate inequality of opportunity, or even realized poverty. They simply reduce some of the gross differences. Our progressive FIT isn't going to prevent the super-bright Harvard grad from making millions as an investment banker. It does mean that the kid who struggled to get through high school and works as a roofer gets to keep a higher percent of his income than he would with a flat tax. That's an okay result to me. There are certainly other things we can do besides or instead of progressive taxes.
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Old 08-19-2008, 02:35 PM   #155
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Originally Posted by Frugality_of_Apathy View Post
Opposing arguements
Practical arguments
1) Canít get blood from a turnipDon't bite that hand that feeds you
2) Got to go where the money isThe candle that burns twice as bright burns half as long
3) Some govít spending explicitly supports the poor. Itís silly to tax the poor or lower middle for this spendingTo whom much is given much is expected

Incentive arguments
4) High earners make more per hour, consequently higher tax rates on them leave more level incentive to workIf businesses pay time and a half to encourage overtime; What do you suppose the government charging time and a half does?B]
5) Itís better to tax dumb luck than hard work (this may be identical to (4), or may be a ďfairnessĒ argument)Is a man not entitled to the sweat of his brow?

Utility arguments
6) High income/high wealth have more to protect, hence should/would pay more for protective servicesThe police are not their to protect you, they have no power until a crime has already been committed and you are bleeding in the streets. You must provide for your own protection.
7) Same as (6), but expanded to entire social structureThe rich send their children down private roads to private schools with their private security guards. Why should they have to pay the lions share for roads schools and social programs they will never use?
8.) Low income get more utility from marginal income, hence we increase total utility by shifting taxes to higher income The poor do not invest or create businesses with their extra income, How many jobs do ten thousand poor with an extra ten dollars each create compared to the business that could be founded from one rich person with an extra $100,000?

Social structure arguments
9 ) Prefer more uniform distribution of income/wealth Ė donít like societies with extremes of rich and poor If the punishment for not working is the same as the reward for working, who would work?
10) Concentration of wealth gives excessive power to a few (this also supports wealth taxes) Those who have the most inv

Fairness argument
[b]11) Our system generates large (unfair) differences in opportunity, progressive taxes somewhat offset thisFewer people play the lottery when the prize is smaller
We're both trying to be brief, and may be talking past one another. I'll try to respond.

1) and 2) I think you are implying this "con": "Progressive taxes drive the most productive workers away". Like many of my "pros", really evaluating that becomes a numbers game - How many do you really lose? How does that compare to all the pros?
3) It looks to me like you are agreeing with me, though I would move your "To whom.." quote to the "Fairness" category.

4) I don't get your point.
5) Again, I think we are agreeing. Compare high and low income workers' paychecks. Look at the ratio of "sweat of brow" to "dumb luck" in those paychecks. I'm claiming that the sweat component is much higher in the lower paychecks. (I'm using "sweat" to represent all effort, not just physical effort.)

6) I think our whole system of laws, police, and prisons dramaticaly reduces crime. The number of actual arrests is small compared to the number of crimes that were never attempted due to the risk of punishment or the fact that the potential criminal is already in prison.
7) The ability to get rich in the US is based on the whole infrastructure of laws, contracts, education, financial stability, etc. People who succeeded obviously got much more financial benefit from this than others.
8.) You are implying this con: "The rich have a higher marginal propensity to save, therefore if we want to maximize capital accumulation we should see to it that they have lots of money." It's a solid con. But note, I think capital accumulation is a means to an end, not an end in itself. So this con doesn't outweigh the pros. To the extent that we want capital, we can get a lot from middle class people by providing tax benefits for small savers - the $100k invested by 10,000 poor each saving $10 is just as useful as the $100k invested by one rich person.

9) I don't get your point.
10) If "inv" means "invest", then I covered this in (8.)

11) You're proposing a con involving incentives. It's a reasonable con, but not directly addressing (11). I'd put it up with (4), which is the counter-argument.
I look at it this way: Worker A makes $100 an hour while B-K each make $20 and hour. We are going to collect $60 in taxes. Do the incentives work best with a flat 20%, so A gets $80 after tax while B-K each get $16? Or are the incentives better with A getting $70 after tax, and B-K each getting $17? To me, there is more total incentive to work in the second case because we've impacted 10 workers with higher utility functions, but that's pretty subjective.
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Old 08-19-2008, 02:41 PM   #156
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Doesn't every industrialized country have a progressive tax system?

So are people leaving industrialized countries for developing countries because of progressive taxation?
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Old 08-19-2008, 03:50 PM   #157
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#6) the US has 5% of the world population and 25% of the world's prisoners. But it's not as safe as many other places. Are Americans getting what they are paying for?

all the anti-progressive tax responders seem to be talking only about income taxes and leaving out regressive sales and other local taxes. I wonder how much progressivity is left when all is said and done. I guess it depends on your individual state/city/county.
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Old 08-19-2008, 04:13 PM   #158
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#6) the US has 5% of the world population and 25% of the world's prisoners. But it's not as safe as many other places. Are Americans getting what they are paying for?
Raise your hands: All those who want to be as "safe" as the lucky citizens of China or Saudi Arabia.

The US has a strong cultural preference for individual responsibility, for holding people accountable for their actions. Our high incarceration rate is a largely a result of this. This has nothing to do with government spending.

If we lowered incarceration rates, there's good reason to believe that crime would go up.

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From 1981 to 1996, according to Justice Department statistics, the risk of punishment rose in the United States and fell in England. The crime rates predictably moved in the opposite directions, falling in the United States and rising in England.
“These figures,” Mr. Cassell wrote, “should give one pause before too quickly concluding that European sentences are appropriate.”
Other commentators were more definitive. “The simple truth is that imprisonment works,” wrote Kent Scheidegger and Michael Rushford of the Criminal Justice Legal Foundation in The Stanford Law and Policy Review. “Locking up criminals for longer periods reduces the level of crime. The benefits of doing so far offset the costs.”
There is a counterexample, however, to the north. “Rises and falls in Canada’s crime rate have closely paralleled America’s for 40 years,” Mr. Tonry wrote last year. “But its imprisonment rate has remained stable.”
(I left the Canadian ref in there to fairly capture the meaning of the quote. I'm not sure it's germane).

Now, a lot of this incarceration is due to the "war on drugs", which I think is a dubious proposition at best. But, for the rest of it, paying to lock up those who forcibly take the lives and property of other citizens is a good use of tax money.
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Old 08-19-2008, 04:14 PM   #159
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#6) the US has 5% of the world population and 25% of the world's prisoners. But it's not as safe as many other places. Are Americans getting what they are paying for?

all the anti-progressive tax responders seem to be talking only about income taxes and leaving out regressive sales and other local taxes. I wonder how much progressivity is left when all is said and done. I guess it depends on your individual state/city/county.
You are quite right ladelfina, there are many countries that you can walk down the street in any city at 3:00 am, and no one would ever try to assault you etc. But.... at what price to pay for such a society? Some of these same societies are so brutal on the individual rights of their citizens, that no one dares to break even minor laws because of the excessively hefty punishments for even small infractions. Yes... women still get stoned to death in certain countries for showing their face in public, or having lunch with a man that is not their husband or a family member.
I believe there is a certain "cost" if you will, of living in a free society as ours is. You do not need "papers" to freely move around the US, and people do not get abducted in the middle of the night never to be heard from again, just because they might have said the "wrong" thing, just a bit too loudly. But the flip side of that sort of freedom, is that a larger percentage of people will and do abuse their rights. Is it really so far fetched to think that in one of the freest countries on earth that you will have the most abusers of that freedom as well? I would think they would go hand in hand.
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Old 08-19-2008, 04:27 PM   #160
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I believe there is a certain "cost" if you will, of living in a free society as ours is. You do not need "papers" to freely move around the US, and people do not get abducted in the middle of the night never to be heard from again, just because they might have said the "wrong" thing, just a bit too loudly. But the flip side of that sort of freedom, is that a larger percentage of people will and do abuse their rights. Is it really so far fetched to think that in one of the freest countries on earth that you will have the most abusers of that freedom as well? I would think they would go hand in hand.
This makes sense. I just have a couple points to make, with which you may not be in complete agreement. First, I think the US has become less "free" in recent years. The War on Drugs, the War on Terror, and the the War in Iraq (hey, I needed a third war to lament) have slowly chipped away at our freedoms. This came about after 9/11, as more and more people seemed quite willing to give up freedom for security. I'm not going to quote Benjamin Franklin here (just reference his quote ), but my hope is that people re-evaluate what it means to be a citizen of a country, and the role that government should play in their lives.
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