Ron Paul Goes After Bartender Vote


Alt-text fail

From the New York Post:

Rep. Ron Paul, the libertarian-leaning Republican presidential candidate from Texas, has become an unlikely hero among bar and restaurant workers as he fights for a bill that would end all taxes on tips—the bread and butter of bartenders and waiters.

Last Thursday, a group of Paul's Big Apple supporters, called the Ron Paul NYC Liberty HQ, held a Manhattan pub crawl in support of the legislation.

"It's just not right. That money is supposed to be a gratuity for [the workers], not for the government," said Dominic Inferrera, 38, a volunteer with the group. […]

Paul introduced the Tax Free Tips Act of 2011 in March. The measure would end all income tax, Social Security withholding and other federal levees on any tips earned by salaried workers.

"Unlike regular wages, a service-sector employee usually has no guarantee of, or legal right to, a tip," Paul said in 2009, when he introduced a similar bill.

"Instead, the amount of a tip usually depends on how well an employee satisfies a client. Since the amount of taxes one pays increases along with the size of tip, taxing tips punishes workers for doing a superior job."

Whole thing here; link via the Twitter feed of Lew Rockwell.


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  1. Uh, Paul’s argument makes no sense so long as the income tax exists. If you make extra money, you get taxed more — that’s true of all types of compensation, and I don’t see how tips should be treated differently because they’re not “guaranteed”. Neither are most forms of income.

    1. Agreed. Either the income tax applies to all income, or it applies to none. And if it applies to none, then come up with a serious alternative to fund the government. And said alternative can include how to reduce the size and spending of government, just not some puerile idea of no government.

    2. His logic is pretty faulty all around. Since salaried employees typically have no guarantee of, or legal right to, a bonus, should those be tax free as well? Especially since bonuses are often performance based.

      1. It is true though, that while subject to income tax are are not subject to the FICA taxes.

      2. It is true though, that while most (all?*) bonuses are subject to income taxes, some of them are not subject to FICA taxes (I’ve received such bonuses)

        *carried interest exemption being the one I can think of.

      3. Um. No. Gratuity and compensation are not the same thing. If so, they wouldn’t call it gratuity.

        If your bonus is part of your compensation then I can accept it being taxable. However, a gratuity does not come from your employer, but from a client. If you got your bonus from a third party that appreciated your work, then you may have a point.

    3. How about the minimum overal tip rate for establishments? Doesn’t look fair to me…

    4. How about the minimum overal tip rate for establishments? Doesn’t look fair to me…

    5. Gifts under $13,000 from one person to another are not taxable. The position is that it is more of a gift than compensation, and that position has a TON of merit.

      1. That’s fine, as long as bonuses are held to the same standard.

        1. if a client of your company walked into the door and handed you $12,999, then I would agree with you.

          1. Michael, you are applying the correct logic to this. I’m sorry others are missing this point.

          2. If a client handed me $12,999, it would be called a kickback.

  2. I hate the income tax with a passion, but I agree with Tulpa. Tips are undeniably a form of income, albeit not a predictable one. A self-employed person also receives income based on “how well they satisfy a client,” so I don’t see how that differs from tips.

    I suppose Paul’s strategy is to take it one step at a time–sort of like arguing for legalizing medical marijuana as a first step to legalizing it entirely.

    1. The way it used to work and I presume still works, is that they assume that you will get tipped at least 8% and tax you on that basis.

      Think about a waitress at a donut shop. People often just leave their change which might only be 3% of the bill. It’s completely ridiculous to tax the poorest people on what your guess is that they might make.

      In addition, not only are you taxing people for doing a better job, you rely on people’s honesty to report their tips accurately (unless it is on a credit card and there is a record) and so you also penalize honesty.

      It was a horrible idea when it was implemented 30 years ago and it is a horrible idea now.

      And saying no reforms should ever occur until we have the perfect libertarian tax system in place (which will be on the 4th of NEVER) is typical fanatical silliness.

      1. Don’t misunderstand me. I think it’s a great idea to eliminate taxes on tips, primarily as a first step to eliminating income taxes altogether.

        I just don’t believe in being dishonest by trying to claim that tips are not a form of income, when they clearly are.

        The difficulty in accurately assessing and collecting taxes on tips is a stark demonstration of how much control over private employment the government exercises through the income tax system. A national sales tax would have plenty of issues of its own, but one benefit would be getting the feds out of that aspect of the employment relationship, allowing employers and employees to come up with new and more flexible ways of determining compensation.

      2. Excuse me but I believe that will be the second Tuesday of next week.

      3. When I drove pizzas in college you were expected to self report your tips (well, it’s not like they could watch the transactions, was it?).

        So the obvious happened: there were people who reported less than 30% of what they actually received.

        These days I suppose so much tipping happens on the record with credit and debit transactions that it doesn’t make as big a difference.

      4. People who underreport their tips get screwed in other ways, though; their pay stubs and other income reports will understate their income and this probably will prevent them from getting credit or a decent place to live.

        1. I would much rather have tax free money than a good credit score.

        2. Credit, yeah, maybe, but I’ve found apartments don’t care as long as you’ve got enough cash on hand.

  3. Admit it. You crazies would all prefer a flat tax or national sales tax to the current U.S. Tax Code, wouldn’t you? Crazies.

    1. Looking from the outside, I would say that the US Tax Code is a mess with more special favors for priviledged groups in it than a maitre d’ has for big-tipping repeat customers, so just about anything would be an improvement.

    2. RP’s argument would still be against even a flat tax on tips….

    3. Land value tax. Only.

      1. fucking a. somebody knows whats up.

    4. Actually I would prefer that government services be financed on a user fee basis.

      Just like things are in the private sector.

      1. This too. MOST govt shit can be paid for by the people using it: dmv, courts, post office and schools (the latter 2 could just as well be privatized, but as a stop-gap…) Even police and prisons can be financiered in part by taking assets from the property/violent criminals and also forcing them to work off their debt to the citizens. A land tax will cover the other things – basic infrastructure, military, a census, and basic govt administration. Lotteries can pay for things like the space program and more sophisticated infrastructure (which will also charge user fees).

        This “libertarian” idea that the income tax should be replaced by a flat income tax, or a national sales tax, is POISON. It is nobodys business how much money someone else gives you for a service you perform or product you make.

    5. I would prefer a flat tax, in the sense of a fixed percentage of income without any deductions or credits, beyond a single large standard deduction. The 1040 form should be the size of a postcard, and the Tax Code should fit on an 8.5×11.

  4. Don’t bonuses and commissions operate on the same principle?

  5. While I applaud abolishing any tax:

    “It’s already a big blow to just receive a meager 15 to 20 percent tip for the amount of work we do.

    Is there any other business that generates a matching payment to employees of 15-20% of gross revenue?

    1. And withholds taxes based on only 8%?

      1. The main reason is it at 15-20% now is because of the law that it is taxed at 8%. Before this law was passed, 10% was standard.

        1. I recall 15% being standard. Never 10%.

          1. It depends on what you’re tipping for — no way I’m tipping a hotel maid 15% of the cost of the hotel stay.

            Well, unless I get the DSK special.

            1. I only tip hotel maids if I trash the room. In many hotels you’ll see the head housekeeper check all the rooms before they are cleaned…for tips.

    2. You forget that by law, wait staff are often paid 1/2 the minimum wage. Yes, I know it’s not exactly the way the law is written, but in practice this is what happens.

      The “collusion” that statists are against becomes in this case a de-facto kind of collusion due to gubmnt policy.

      1. Actually, I think in Texas, waitstaff is still paid $2.13, which was half of the minimum wage in ~1992.

        1. Yep, that’s about what my wife makes per hour + tips.

      2. And once they serve customers who spend 3x the minimum wage — which probably happens in 10 minutes at a decent establishment — they’re back up to minimum wage.

        1. A lot of places require servers to share their tips with the cooking staff and bartenders.

          1. Define “a lot”. I’ve never heard of that before. How can they still tax you on it if the company requires you to share it?

            1. I don’t know about sharing with the cooks, but requiring 10% or so go to the bartender who makes your drinks is not uncommon.
              Often the waitstaff will thank the kitchen by buying a round of drinks.

          2. And bus boys and hostesses.

          3. Yup! Actually my old neighbors who owned a liquor store / bar in the area used to require all tips be pooled together and shared – this always pissed off the waitresses who had to share their tips with the bus boys, cooks, etc. It actually drove decent people away from even wanting to work there. It’s a nice place, too.

    3. Well, is there any other business that passes paying the employee wages directly to the customer?

      I’m not saying I have a problem with it, though. Most people I know who get tips make a lot more than everyone else ( for example, try being a cook in a decent restaurant) and under report it. I knew a couple who were servers ( and made 6 figures working part time) and their biggest complaint was that their wages were under-reported and they did not qualify for the huge mortgage they wanted.

      1. GC sez: “Most people I know who get tips make a lot more than everyone else…”
        Bernieyeball sez: Good on them!!!
        Aren’t we all supposed to be free to make as much as we can?
        ChrisO sez: “A self-employed person also receives income based on “how well they satisfy a client,” so I don’t see how that differs from tips.”
        If that was all there was to being self employed it would be a cakewalk. You also may have to cut your fees so low that u barely cover cost of operation since some other guy in town can do the same job as good for less.

    4. If they don’t like that “big blow”, they’re totally free to find another job.

      And libertarians complaining about paying someone less than minimum wage? Really?

      1. Well, if the job is not worth minimum wage, it is a problem to force that to be paid. However, I think servers are worth far more than minimum wage.

      2. Libertarians complaining about unequal treatment under the law is not inconsistent with libertarianism. Nor is someone trying to take libertarians to task for something that is wrongly perceived as an inconsistency “gotcha.”

      3. You couldn’t have made a “from a magazine called reason?” comment? I could use a drink.

  6. What is puerile is the addiction to government.

  7. How many servers and bartenders actually report all their tips?
    Just report enough to keep the IRS from getting suspicious, say 10-12% of your sales, and pocket the rest.
    That way the taxes on your declared tips eat up your hourly wage making your paycheck is zero, and it comes out a wash at the end of the year.
    If you declare all your tips then there’s a good chance your hourly wage doesn’t cover all your taxes, and you may owe money come tax season.

    1. Don’t they withhold based on estimated tip income as well?

      1. I have heard of this before. It screws a lot of people over.

    2. Unfortunately, I know far too many people who tip at 10% or less. I know some who will only pay $2, even if their meal was over $50. Some people are just cheap bastards.

      1. The worst are doctors and lawyers. Lawyers especially. There’s no law that says they have to tip, so many of them don’t. Not a penny.
        Teenagers often don’t tip, but that’s just ignorance.
        In the long run it doesn’t matter.
        For every lousy tipper there’s an over tipper (that’s an oxymoron actually since no tip is too big and no tip is too big).

        1. For every lousy tipper there’s an over tipper (that’s an oxymoron actually since no tip is too big and no tip is too big).

          In my experience, retirees and snowbirds are the worst. When I delivered pizzas, a lot of our business came from a retirement community, and most of them would tip less than $1 or not at all. There was one guy, however, who had a huge house out on the beach, who wanted to pay for his $30 order with a $100 bill. When I told him I only had $20 to make change, he said, “that’s cool, just give me the $20, and you keep the rest.” That guy was awesome. I never had a delivery to him again, but some of the other drivers did and he always tipped them $40-$50.

  8. I do not remember when the Feds started counting tips as income. I think it was after I worked the only job I’ve had that included the occasional gratuity. Taxi driver.
    It didn’t matter at the time because there were no tips to speak of.
    In 1970 in Sleepytown my fares who handed me a $ bill to cover the 60 cent fare to the commercial laundry to work expected the 40 cents change. They needed it to put it together with the two dimes they had in their pocket for the cab fare home.
    My revenue for that 60 cent drive was 30% commission. Twenty cents.
    Waiters and waitresses who schlep for tips work hard and put up with customers straight from the bowels of Hell.
    The only thing worse than getting stiffed on a tip is having to declare it as income and pay taxes on it anyway.
    Even when I use plastic to pay the bill at Hooters, I try to have cash for the tip.
    I should not have to tell you why.
    Now if Ron Paul would come out in favor of repealing the law in Illinois that makes selling a car Illegal I might be in his corner.

    1. Other professions don’t work hard or have to deal with crappy customers? The lady at the airport counter that gets shouted at for weather or fuckups that aren’t her fault like overbooking or canceled flights doesn’t get tips. Neither do flight attendants that deal with unruly passengers. Same goes to people that man the customer service desks at retailers.

      1. Life’s a bitch.
        When I worked for the Telephone Company everybody hated the Telephone Company all the time.

        1. I agree. I was just pointing out the fallacy of saying that servers deserve it because they work hard and deal with shitty customers. Pretty much anyone that has a public facing role deals with shitty customers.

          1. Mo sez: “Other professions don’t work hard or have to deal with crappy customers?”

            Where did I say that?

            Waiters and waitresses deserve whatever they can get especially because they put up with the she-devils and drones among us.
            What fallacy? This isn’t about logic.
            If workers in other fields who interface with the public get paid a fixed wage or salary and have to put up with skunks then maybe they should get a different job.

  9. Leaving aside the excessive taxation is theft argument…

    Paul is on to something, in that tipped employees are taxed on a set percentage of their overall sales, rather than the actual tips they receive. This was a work-around for the chronic under-reporting of tips, and most tipped employees are making more and not declaring it, and are “beating” the tax. But some tipped-employees that routinely make less than the set percentage are getting screwed.

    By the way, credit-debit card tips are taxed in full. Whenever I can, I pay cash, or pay with a card and tip in cash.

  10. I’m disappointed in Ron Paul for supporting this. One of the biggest problems with the current tax code is the way it picks winners and losers. Too many politicians in this country try to get elected by promising their constituents they will deliver certain special tax breaks, and now Paul is becoming part of the problem.

    1. I wouldn’t consider this a ‘special favor.’ You act as if Paul is introducing a bill to subsidize waitresses – send them free money that only they qualify for. No, he’s simply demanding that they at least have the opportunity to *attempt* at surviving off of their income + tips. Inflation, currently around 10%, eats away at these individuals, and the middle class as a whole, and inevitably wipes out the entire middle class. Paul is against the income tax in general, but he also supports incrementally dismantling the criminality of our government. The way food service workers are taxed is not fair.

  11. Why don’t restaurants just raise their prices by 15% and pay servers a real salary? The whole tipping system we have for restaurant service is kind of stupid. It’s not really a tip if it is basically obligatory, is it?
    On the other hand, I suppose it is a good incentive for servers to do a good job. And I do generally approve of informal, unreported transactions.

    1. That’s the way they do it in Europe.

      Which results in European servers being ecstatic to see clueless American customers sit at one of their tables.

      1. Restaurants are the one place in Canada where they are happy to discover that you are American.

        1. Wow, I didn’t know they didn’t do tips in Canada either. Guess I’ve been a “clueless American” plenty of times too… 🙂

          1. No, Canadians are definitely, definitely expected to tip. I think it’s more customary to tip 15% for average to good service and probably rarer to shoot for 20%. But even when in Canada, I tip 20% unless there was a serious problem, because both my sisters have worked in the restaurant biz and would disown me if I were a bad tipper.

            1. Then why don’t Canadians tip when they come to Florida?

          2. It seems to not be “no tips,” but definitely not the 15-20% Americans are used to. Canadian waitstaff was hit or miss, but I started slipping our American status into conversation early on in a meal and the service always improved, on one occasion, dramatically.

            1. I will say I’ve only been to Toronto for any length of time.

            2. on one occasion, dramatically.

              Did they take you into the discreet VIP room?

        2. Restaurants are one place in America where they are especially unhappy to discover that you’re Canadian.

          1. The Obama administration would like you to report to the main office, thankyouverymuchracist.

        3. Tips aside, I think Americans are generally more well liked than conventional wisdom would have you believe. Even when I worked in a hardware store in highschool in Canadialand

          1. hurr durr accidental submit.

            Was going to say: I always liked when Americans came in with their friendliness and John Wayne-sounding accents. (To the untrained ear, you all sound like cowboys. Which is really very charming.)

            1. Wow, if I’d known I sounded like John Wayne, I would have totally scored more with foreign chicks.

            2. IME, a slight southern accent (Floridian) goes over very nicely in Australia.

          2. Oh, I’m just playing around. We Norte Americanos need to stick together.

    2. I have found that service is generally pretty good in U.S. restaurants, and I believe that is related to the practice of tipping.

      However, if a restaurant wants to take the approach you suggest and it gives them a competitive advantage, good for them!

    3. It’s a situation that benefits both parties through competition. The waiters work better for you because your satisfaction is part of their compensation, and the owners of the restaurant get a workforce that can work largely unmonitored.

    4. You might be surprised how attached people can be to tipping.

      When I’m in a foreign land that does not engage in this odd little ritual of ours, I tend to be profoundly uncomfortable as I leave the table. The thinking parts know better, but the Mummy Lobe is screaming “You didn’t tip! That’s Rude!”.

      It takes a while to get over every time I go abroad.

    5. “On the other hand, I suppose it is a good incentive for servers to do a good job.”

      That’s exactly it. It encourages servers to do a good job and provide the customer with a good experience, and it also encourages them to up-sell which benefits the restaurant.

      When the server suggests an appetizer or dessert, or asks if you want another drink, it’s not because they like you.
      They’re trying to drive up the total bill, and since the tip is a percentage of the total bill, they’re trying to increase the day’s take.

      1. Should I have to tip my contractor to assure that the new addition to my house won’t collapse? What about tipping the surgeon after surgery to make sure he actually took out the burst appendix. What makes full service dining relatively unique in that their employees require a tip to do a good job?

        1. You don’t have to leave a tip.

          Just don’t expect an attentive server if you go back to the same place.

        2. Even if you don’t tip, there are still legal consequences for waiters who poison your food.

          The tip is intended to encourage service above and beyond the bare minimum of carrying your food to you. Maybe we should tip contractors who finish work really fast and are friendly to us when doing the job.

          1. That’s the theory. However, the idea of a “standard” tip seems to indicate that tips are for standard service as well. If tipping was related to service quality, then it would be on a straight scale for services (like a per day/per bag tip for hotel housekeepers and bellmen) rather than as a percentage of income. Is bringing over a Newcastle twice the effort of bringing a Bud Light? The value of the tip for one will be about double the other.

            Disclaimer: I tip about 18-20% out of deference to social convention. I’m at Mr. Pink’s level of dislike for tipping.

            1. Yeah, it’s one of those rule of thumb things because actually keeping track of how much work they have to do is too hard.

              I do get irritated when at a restaurant where they automatically charge you a 15% surcharge if you don’t tip or undertip. Kind of destroys the point.

              1. My rule is if the restaurant puts on the tip, that is how much they are getting. I usually tip better than that, so oh well, their loss.

              2. How about Pizza Hut’s ‘delivery charge’ that has nothing to do with the delivery, and doesn’t go to the driver? I find that one quite amusing. I think it’s immoral of PH to charge that fee, because I can assure you there are people who just assume that it’s the tip just built into the check. Many people would never think to ask the drivers. I have, and it’s not a fee that goes to them.

                1. Mitchell is correct.

            2. Some people make money as a server, others do not. If tips were as standard as you say, then there would be no variation.
              A lot of it is sales. With the tip being a percentage of the bill the server has incentive to sell as much as possible.
              Making money as a server depends on both delivering good service and up-selling.

            3. “I tip about 18-20% out of deference to social convention.”

              I tip based on service, usually in $5 increments.
              The psychological effect of clearing a table and having a pile of one dollar bills vs a ten-spot are totally different.

        3. I could see a clause with a contractor that gives them additional money if they complete ahead of time, or less if they take too long. I can also think of several ways that could be problematic.

          I think tipping for service-industry jobs is predicated on most people knowing that the server isn’t paid very well (or at least not paid what it would take for “me” to want to do the job), and on the knowledge that their service will be recognized quickly.

        4. Of course you don’t but they’re also not usually hot young college girls trying to please you – –

      2. Personally I think every profession should be tipped. Obama should get $100,000 up front per year, and if he wants any more, the rest of the time he has to stand outside the White House with a coffee can labeled “TIPS”.

  12. I will say that I constantly tip pizza delivery guys well. I get pizzas blindingly fast from those places I frequent.

    1. To

      I’m pretty sure that’s not the true origin of the word, but in practice it is definitely true.

    2. Are you supposed to tip when you pick up the pizza yourself? I’ve been getting a seriously bad vibe from local pizza places when I don’t put anything in their tip jars.

      Considering the whole reason I do carryout rather than delivery is to avoid having to tip someone, I don’t get that.

      1. Yeah, the whole Tip Jar phenomena is a weird thing. I mostly only use it as a change dump.

      2. It’s the same way at a lot of restaurants that do carry out. I never tipped because no one was actually serving me. A friend tells me, though, that the sales get counted on someone’s daily totals, usually bartender or whomever hands you your food, and the tips are assumed for taxes and whatnot.

      3. If Im paying at a counter, there will be no tip.

    3. My tips to delivery people are usually based on speed and how crappy the weather is. If there’s a torrential downpour or a blizzard, I’ll give the driver a tip for dealing with weather I want nothing to do with.

      1. As far as the speed, keep in mind what time of day you are ordering and how busy the restaurant is, and how far you live from the place. There were many times when I was delivering pizzas that I was standing around waiting on the kitchen to cook the damn pizzas for a delivery that was due in 5 minutes and the house was 20 minutes away.

  13. Making tips tax-free on the theory that they’re special not-for-the-government gratuities is stupid. Unless your kindly grandpa was at the table, it’s safe to assume that the money you were tipped was income for a service, not a gift.

    On the other hand, making tips tax-free on the theory that you don’t want to financially punish honesty among often-poorly-paid workers might be a good idea. They’re already being punished by a system that financially rewards cheapskate customers; why not let them keep more of the money they do get whether they lie about it on their tax returns or not? It’s not like you’re going to catch them at tax fraud in any event, so you might as well let them get through the job with their integrity intact. Since waiting tables is a popular temporary job for young people, it’s almost as if we’re hazing new entrants into the workforce by teaching them awful life lessons.

  14. Making tips tax-free on the theory that they’re special not-for-the-government gratuities is stupid. Unless your kindly grandpa was at the table, it’s safe to assume that the money you were tipped was income for a service, not a gift.

    On the other hand, making tips tax-free on the theory that you don’t want to financially punish honesty among often-poorly-paid workers might be a good idea. They’re already being punished by a system that financially rewards cheapskate customers; why not let them keep more of the money they do get whether they lie about it on their tax returns or not? It’s not like you’re going to catch them at tax fraud in any event, so you might as well let them get through the job with their integrity intact. Since waiting tables is a popular temporary job for young people, it’s almost as if we’re hazing new entrants into the workforce by teaching them awful life lessons.

    1. Here’s a fun life lesson I learned today: “It’s the web; don’t double-click.”

      1. whatever happened to the laserdisc?

      2. whatever happened to the laserdisc?

      3. whatever happened to the laserdisc?

  15. I should’ve thought of that!

  16. Ron Paul is the only candidate that will end all the wars. Both Republicans and Democrats support endless Wars for Israel, it all started nearly a decade ago under a false flag attack.
    9/11 and Israel, here:…..-000190526

  17. So you can give a person a tax-free gift of up to a certain amount (I wish I had it, it’s in the thousands), but you can’t give a gratuity to someone who has served you well?

    I believe you guys are caught in the wrong logic here. You guys are looking at this like the servers are being PAID. I don’t see it that way. You pay them the price of the meal and then tip based upon your satisfaction with their service. It’s totally voluntary (Except for parties over 8:))

    If I give someone a gift, it should not be taxable at a different rate unless it reaches the same limit.

    1. I think its like 2kish, I’m sure we have an accountant on here somewhere!

  18. I gotta support this. If this were to become law, the government would soon put an end to tipping.

  19. Is everyone on this thread brain dead?

    A tip is a gift for your service – how does the government tax a gift? That’s what he is essentially saying.

    You people are ridiculous.

    1. “a gift for your service”? You mean i.e. a transaction. which is therefore not really a gift at all?

      I can’t tell if you’re being serious or demonstrating how silly the argument is.

  20. I am pretty sure that Ron Paul is a closet gay. Rand Paul–the idiot son– is actually the product of an incestuous relationship Ron Paul had with his sister in an attempt to make himself like girls. Such attempts never succeed.

  21. Maybe people should investigate what he says instead of just saying “I don’t get it.” Anyone that knows how to read and reason votes for Ron Paul. Everyone else either has an IQ of 16 or is in it for their Agenda. There’s no reason not to vote for Ron. Just because you don’t understand his policy is no reason to ignore him. That’s unreasonable and irrational. I don’t understand the bandwagon of hate towards Ron. I just don’t get the insults or where they come from. America is doomed. If Ron doesn’t win I can’t say I wouldn’t be just as happy seeing all of you degenerates and shills get what you deserve in the long run anyway. Either way I’m sure you will.

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