1) There is no conservation of visceral feeling. Performing math to determine how you feel about something is just as bad as using your feelings to estimate probabilities.
2) None of the tax savings should be directly distributed to the dependent. The tax savings exist because the dependent student is financially dependent on her parents, and would be even if the tax savings did not exist- she is being subsidized already.
As a fairness issue, the exemption should be taken by the person who will get the largest marginal benefit from it, and then distributed proportionally to the expenses incurred in supporting the student. If the numbers work properly, this is done trivially if the total amount of the exemption is applied first to the student’s expenses and the remainder of those expenses is paid according to whatever is deemed fair by all participants. If the participants cannot agree regarding what is fair, the student does not go to school as a dependent and the exemption does not exist.
3) Everyone should pool all of their investment money- $5000 of it earns 12% interest, and the remainder is invested by the person who expects 6% annual returns. A fair amount is deducted as payment for investment services, and the surplus is distributed proportionally to the amounts paid into the mutual fund. If any of the participants do not agree on what a fair fee is, then those people do not participate.
Sorry that they don’t generalize well. The third one still confuses me- why don’t three people who can cooperate fairly at the same level already share investment advice and have identical returns on investment? Is the person who is getting lower returns more risk-adverse than the other two? If so, why is a loan which has little risk of default made to the fourth at twice the high-risk yield, given that a low risk of default is a premise of the question?
1) There is no conservation of visceral feeling. Performing math to determine how you feel about something is just as bad as using your feelings to estimate probabilities.
2) None of the tax savings should be directly distributed to the dependent. The tax savings exist because the dependent student is financially dependent on her parents, and would be even if the tax savings did not exist- she is being subsidized already.
As a fairness issue, the exemption should be taken by the person who will get the largest marginal benefit from it, and then distributed proportionally to the expenses incurred in supporting the student. If the numbers work properly, this is done trivially if the total amount of the exemption is applied first to the student’s expenses and the remainder of those expenses is paid according to whatever is deemed fair by all participants. If the participants cannot agree regarding what is fair, the student does not go to school as a dependent and the exemption does not exist.
3) Everyone should pool all of their investment money- $5000 of it earns 12% interest, and the remainder is invested by the person who expects 6% annual returns. A fair amount is deducted as payment for investment services, and the surplus is distributed proportionally to the amounts paid into the mutual fund. If any of the participants do not agree on what a fair fee is, then those people do not participate.
Thanks for actual answers! :)
Sorry that they don’t generalize well. The third one still confuses me- why don’t three people who can cooperate fairly at the same level already share investment advice and have identical returns on investment? Is the person who is getting lower returns more risk-adverse than the other two? If so, why is a loan which has little risk of default made to the fourth at twice the high-risk yield, given that a low risk of default is a premise of the question?