Interesting explanation of the tax system from a economics professor.
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 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 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 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 ten 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! (The 10th man was originally paying $59 of
$100, then $49 of $80).
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.
David R.
Kamerschen
Ph.D.
Professor of Economics
University of Georgia
For those who understand, no explanation is needed.
For those who do not
understand, no explanation is possible.
Interesting explanation of the tax system
by purplesofa 21 Replies latest jw friends
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purplesofa
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insearchoftruth
Very interesting and very unique explanation actually!
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beksbks
Sorry Purps but this one has been going around for quite a while, and they have no idea who actually wrote it.
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beksbks
Insearchof, it's actually a terrible explanation. It does not in any way take into account the complexities of how our system works. Or where the men got their money in the first place, which is key.
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PrimateDave
http://www.snopes.com/business/taxes/howtaxes.asp
Apparently, nobody knows who really wrote this piece.
Dave
Edit: Oops, beksbks beat me to the punch! -
insearchoftruth
Yes the system is quite complex, but as good of a simplistic view as I have seen.
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purplesofa
Sorry Purps but this one has been going around for quite a while, and they have no idea who actually wrote it.
Oh well, it was something to post and something to read.
Something to ponder.
purps
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still-fading
Well here's one that I've actually used on a couple guys in work. I was talking to 2 guys, I'll call them "A" and "B". And we were talking about taxes and wealth distribution. So I asked "A", how much cash do you have on you? He said $5. Then I asked "B", how much do you have? He said $20. So I told "B", "that's not fair! You have to give me $5 so I can give it to "A" right now, and if you don't hand me the money, you could face jail time!" They both got the point. It's simplified, but that is exactly how it works.
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kurtbethel
It covers the basic idea.
There is more though. You have to factor in the Alternative Minimum cost of Beer. You may carry forward certain beer purchases from the past 5 weeks, excluding packages used for individual consumption, then average the results. In certain beer brackets, your wine costs may be used as an offset, provided it is a winery that has a treaty with the brewery. Of course, travel expenses are deductable so if you drove your SUV then you get a larger offset than the guy who walked. (who also got the free beer and is now complaining that you got a transportation offset and he did not) Also, guy #2 chummed up with the brewery, slipped them some cash and the brewery issued a ruling that guys with tweed suits are exempt. Wouldn't you know, guy #2 wears a tweed suit, oh my!
There, now we are getting closer to the tax system. -
hillbilly
Purps... if snopes says it not true.....
Good story , wherever it came from......
Jeff