An Explanition Of Income Taxes
Provided for your enjoyment:
Let's put tax cuts in terms everyone can understand .
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until on day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got te n times more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
Let's put tax cuts in terms everyone can understand .
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until on day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got te n times more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
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Very good.
D.0 -
good analogy 0 -
Boo hoo hoo.......poor little rich guy! If I made $500k a year (what I'd consider "rich") I'd cool it and pay the $150k and be happy.
Merc (Flat tax is needed, let EVERYONE pay the same percentage, including the poor!)0 -
ok if it was a lottery, merc
If you earned it, you might wonder why you are working so hard to pull everyone.
ALSO, the 4 poorest would get a 6 pack to take home (refund)0 -
If I made $500k a year (what I'd consider "rich") I'd cool it and pay the $150k and be happy.
Wanna bet??? [}:)]0 -
quote:Originally posted by Mercury
Boo hoo hoo.......poor little rich guy! If I made $500k a year (what I'd consider "rich") I'd cool it and pay the $150k and be happy.
Merc (Flat tax is needed, let EVERYONE pay the same percentage, including the poor!)
OK on the flat tax!!!!!!!!!!!!!!!!!!!!
crapola on the 500K.... stop and think about what you said... OVER $12,000.00 a MONTH in income taxes for that one person? How is that fair? Paying that amount of tax is a huge burden. Why does the Gub'Ment think you should pay a higher PERCENTAGE than the next guy? More dangerous; why do you?0 -
Given that the top 1% of the U.S. population receives 20% of the nation's income, they can afford it. Given that the CEO of Exxon was given a bonus that amounted to $136,000 per day, he can afford to pay for the damned beers.
It would be one thing if they worked for their money, but the fact is a great many of the rich do not engage in what we would call honest labor.
And given how often they raid 401k's and lay off workers to shore up their own outrageous year-end bonuses, I'd think twice about sticking up for the poor, put-upon megamillionaires. They don't appreciate slavish devotion from us "lesser people," they expect it.
So do you really want to give them what they want? Or are you going to make them earn it like everybody else?0 -
lowering taxes generates MORE revenue. win win situation. liberals dont understand this because their fundamental goal is to punish the rich. 0 -
First of all $500K is hardly the ceiling for the "rich". My wife and I are "luckily" enough to be considered in the "rich" category and we don't make half of that combined.
Punishing the more successful people in the country is atrocious. Just because my wife busted her ass to get her Doctorate and I work my ass off to get to where I am today, we deserve to get taxed more? Yeah... real good idea to promote hard work and education!
Flat Tax for the win!0 -
quote:Originally posted by ElMuertoMonkey
Given that the top 1% of the U.S. population receives 20% of the nation's income, they can afford it. Given that the CEO of Exxon was given a bonus that amounted to $136,000 per day, he can afford to pay for the damned beers.
It would be one thing if they worked for their money, but the fact is a great many of the rich do not engage in what we would call honest labor.
And given how often they raid 401k's and lay off workers to shore up their own outrageous year-end bonuses, I'd think twice about sticking up for the poor, put-upon megamillionaires. They don't appreciate slavish devotion from us "lesser people," they expect it.
So do you really want to give them what they want? Or are you going to make them earn it like everybody else?
Honest labor, what does that have to do with investing and job creation? Unless you personally paid the investment cost of creating your job, you'd better be damn glad that some of those people who don't "earn" their money like the rest of "us" just took some of that money that is not involved in "honest labor" and created the job you hold.
A couple million dollars at just 5% (pathetic return) will return you $100,000 per year, without doing any work at all, but if the people with resources don't invest it the vast majority of folks here are unemployed. Just who do you think puts up the money to build all of those businesses most folks gripe at, but collect a paycheck from each week?
The Brit's found that out when they decided to make the wealthy pay a top end tax rate of 98%. The money started leaving the country, there was no incentive for those who stayed to invest, and jobs just dried up and unemployment increased. Sure did "get" those "rich" people, didn't they? I guess they were born stupid and that's how they and their families got wealthy.0 -
quote:Originally posted by newtgingrich
lowering taxes generates MORE revenue. win win situation. liberals dont understand this because their fundamental goal is to punish the rich.
The increased revenue idea will only be true up to a given percentage, after that the decline in tax revenue from the reduced rate will exceed the increase in revenue from GDP expansion. It is a curve, not a straight line projection and that can be shown by a simple look at the Laffer Curve where revenue starts at 0, has a positive slope for awhile, but then becomes negative at some point.
A tax rate of 100% will yield nothing because no one will work if they don't get to keep anything that they earn. Conversely, a tax rate of 0% will yield nothing for the obvious reasons. In between those figures we find an increasing yield from taxes until we either increase or decrease beyond the absolute optimal rate.
The problem is that we just don't know beyond a reasonable guess just what that optimal rate is and, even then, it will change with the general conditions of economies worldwide and the confidence and attitudes of the consumers who buy the products and services that generate the profits/income to be taxed. It is not simply just "cut taxes and increase revenue", there must be expansion that exceeds the decrease in rates.[:)]0 -
Actually if you look at history you will find the tipping point of taxing to much.
At several times in history the tax rate (and a couple of other items) became to much and the people overthrew the government.0 -
quote:Originally posted by Alpine
Actually if you look at history you will find the tipping point of taxing to much.
At several times in history the tax rate (and a couple of other items) became to much and the people overthrew the government.
Correct, but that had little or nothing to do with the tax rate imposed in most cases, but rather how it was arrived at or how it was implemented.
Several of the taxes that contributed to the Revolutionary War were actually a tax reduction, but they were going to be enforced, unlike some of the earlier, yet higher, taxes.
The Boston Tea Party actually involved cheaper tea, but folks were suspicious of a conspiracy to create a complete monopoly, and then a greater price and tax later.[:)]0 -
The terms "rich/wealthy" are relative. What was once considered rich is merely "doing well" these days. $500,000 a year used to be "rich", not by present standards. There are LOTS of folks that make or exceed that figure. Think of how many you know of. Look around, they're all over the place. When you say the tax laws are in favor of the "rich" you are right, just don't count your average millionaire in that category. These "rich" people definitely pay their share, it's the Rockefellers, Gettys, Kraft/Kerrys, Bushs, Cheneys, Mellons, Vanderbilts, etc. that skate by. A statistical study was posted here some months back that put the low end of the top 5% of earners at $137,000. I'm in that low end and I sure don't feel "rich". I guarantee there's a LOT more distance between $137,000 per year and whatever the high numbers of the top 5% are than there is between $0 per year and $137,000 per year. Like I said, "rich" is relative, and stats can be, and usually are, posed to serve the purpose of the composers. 0 -
you are rich to the democrats if you have a decent job at all 0 -
quote:Originally posted by newtgingrich
lowering taxes generates MORE revenue. win win situation. liberals dont understand this because their fundamental goal is to punish the rich.
[?] There's a LOT of rich "liberals".0 -
quote:Originally posted by Dak To 68
quote:Originally posted by newtgingrich
lowering taxes generates MORE revenue. win win situation. liberals dont understand this because their fundamental goal is to punish the rich.
[?] There's a LOT of rich "liberals".
Yes and they all want to do good deeds.
With someone else's money.
AC0 -
Great post Alpine. 0
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