For those of you that don't understand Tax Issues, please read this it is really a good explanation of our government. Taxes Explained...Read it all! TAX System Explained In Simple Terms
Sometimes politicians, journalists and others exclaim; "It's just a tax
cut for the rich!" and it is just accepted to be fact. But what does that
really mean? Just in case you are not completely clear on this issue, I
hope the following will help Please read it carefully. Let's put tax
cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner 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:
a.. The first four men (the poorest) would pay nothing.
b.. The fifth would pay $1.
c.. The sixth would pay $3.
d.. The seventh would pay $7.
e.. The eighth would pay $12.
f.. The ninth would pay $18.
g.. The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men ate dinner in the
restaurant every day and seemed quite happy with the arrangement, until
one 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 meal by $20." Dinner 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 eat 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 eat their meal. So, the restaurant 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:
a.. The fifth man, like the first four, now paid nothing (100% savings).
b.. The sixth now paid $2 instead of $3 (33% savings).
c.. The seventh now paid $5 instead of $7 (28% savings).
d.. The eighth now paid $9 instead of $12 (25% savings)
e.. The ninth now paid $14 instead of $18 (22% savings).
f.. 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 eat 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 ten times more than me!"
"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 dinner, so the nine sat down and ate without
him. But when it came time to pay the bill, they dis covered 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
eating overseas where the atmosphere is somewhat friendlier.
David R. Kamerschen, PhD
Professor of Economics
University of Georgia
Taxes explained
by startingover 6 Replies latest jw friends
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startingover
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jaguarbass
It would be nice if we were all getting a meal for our tax dollars and not financing tearing up sovereign countries who were a stabalizing influence in the mideast and against terrorism. With our tax dollars our waco president has killed more Americans than Osoma Bin Laden who is probably vacationing in Crawford Texas as I write this and our President has killed more Iraqis than Sadam Hussien who's double most likely was hanged this year. He must be a real demon with our tax dollars. Who is going to protect the American people from the Bush outlaws?
Most likely your children will never be able to pay for this debacle when this country achieves 3rd world status thanks to these republican clowns. Hell, forget your children Bush is on his way to wiping out social security with his reckless ways.
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Elsewhere
Maybe they should stop eating so much pork.
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Mutz
Only there is no 0% tax for the poorest. Everytime you earn some money you get taxed, every time you save some money you get taxed, everytime you spend some money you get taxed etc etc. I wonder how much the prof earns? :)
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needproof
Where is the law that states Americans should pay income tax?
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CaptainSchmideo
Only there is no 0% tax for the poorest. Everytime you earn some money you get taxed, every time you save some money you get taxed, everytime you spend some money you get taxed etc etc.
I believe I have to disagree.
Everytime you earn some money, you get taxed: And if you make less than a certain amount per year, or you have legimate deductions and exemptions, you don't owe income tax at the end of the year (at least, not in the U.S). And if you know you won't be making enough to owe (it's called projected income, or, adding up all your probable paychecks for the next 12 months) then you should not be withholding money from your check when you get paid. There is no law that says you HAVE to withhold Federal or State income tax from your paychecks, if you're not going to owe anyway. And as for Social Security, okay, everybody pays into that, but I've never seen anybody turn that money down when it's their turn to receive benefits from it.
Everytime you save money, you get taxed. I don't see how anyone at the low end of the pay scale can even remotely be worried about the taxes on savings The ones who freak out about being taxed on their capital gains and inheritance taxes are the richest 1% in the country, who are the ones with the most to pay out on this. People like Paris Hilton, for crying out loud! Back to my first argument, a low wager earner should be putting the money that normally would be going to tax withholdings into savings, or at least a coffee can. Even saving 50 bucks a month is still saving something.
Everytime you spend money, you get taxed. True, but in some states, you can credit that sales tax off of your state income tax. I'm no fan of high sales tax either, but look at the condition of towns or neighborhoods that have little or no tax base to pay for services, roads, etc. That is why municipal governments just love stores like Wal-Mart in the neighborhood. Better the dollars stay in the neighborhood, rather than going to the next town over.
Part of the problem with a lot of us (myself included) is that no one explains clearly how things really work when we are young, and just starting out. By the time we finally see the better way of doing things financially, it's almost too late. We have debts for things we shouldn't have gone into dept for (especially credit cards), we haven't saved ANYTHING after 25 years in the work force, and we regret just about every major decision we ever made about our money. This resentment then gets fed by false arguments about how the rich somehow "don't deserve" the money that we think should be ours.
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Euphemism
Actually, in the United States, the poorest pay less than 0% income tax, at least if they have kids; it's called EITC. OTOH, the analogy is wrong in claiming that 4 out of 10 people pay no income tax at all. Based on this government report, in 2000 45% of tax returns reported an income below $30,000, but 31% of the filers in that range owed income tax. So, roughly speaking, the number that pay no tax is closer to 3 out of 10.
Of course the flip side of the data is that the top 3% of the population made over 20% of the income, and the next 11% of population made the next 20% of the income.
If you want a dining analogy for that, let's say that you have five pieces of pie to split among twenty people:
- One guy gets a whole piece to himself.
- Two guys get to split one piece between them
- The other seventeen people have to split the remaining three pieces of pie
That's our American income distribution.Now clearly, capitalism (with some government intervention to soften the edges) is the best economic system yet discovered, and I'm not arguing against it. (It also happens to be serving me well, personally.) But if we're going to have folksy analogies about the distribution of taxes, we should look at the other side of the coin as well.
And BTW, Dr. Kamerschen's web page says:
Contrary to Internet folklore, Dr. Kamerschen is NOT the author of "Tax Cuts: A Simple Lesson in Economics." Additionally, he does NOT know who wrote it.