How many of my fine liberal friends have read this before?

Question

How Taxes Work . . .
This is a VERY simple way to understand the tax laws. Read on — it does make you think!!
Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. 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 $7, the eighth $12, the ninth $18, and the tenth man — the richest — would pay $59.
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 (in tax language a tax cut).
"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." So now dinner for the ten only cost $80.00

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 — the paying customers? How could they divvy up the $20 windfall so that everyone would get his "fair share?"

The six men 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 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 the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. 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 who pointed to the tenth. "But he got $7!"

"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar, too . . . It's unfair that he got seven times more than me!".

"That's true!" shouted the seventh man, "why should he get $7 back when I got only $2? 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 he 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 discovered, a little late what was very important. They were FIFTY-TWO DOLLARS short of paying the bill! Imagine that!

And that, boys and girls, journalists and college instructors, is how the 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 at the table anymore.

Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!

Answer 1

The problem with this question is - liberals are usually the product of public school educations, which means you lost them by the time they reached the second paragraph. Nice try, though...

Answer 2

I am a simple woman, but I do know this, the first four men would not be allowed at the table, they would not eat at all. The remaining six men would eat, the fifth and sixth now being told to order a hamburger, while the richer four, had steak. The bill would be equally split because the fifth and sixth want to sit at the table with the rest so they can say they are doing well. Its illusory. Eventually Five and Six realize they can not affort upper class hamburger at steak prices and they drop out.
Then the four upper class men get tired of seen the poor quality of the barbering of the lower classes, so they fire the men, send their jobs to India and they begin to look at seven and eight as the bottom of the rung. Seven and eight are smug for a while, so they have to do without dessert.
If they don't like it...tough. They all now split the much smaller bill evenly.
Seven and Eight have a misfortune, these hard working men have heart attacks and drop out from the dinner club. In fact they now are eating in the diner with One and Two, when they eat out. No healthcare, no coverage.
This leaves Nine and Ten, they order more food than they can eat, really stuff themselves. Fine wines, and even women make an appearance now. Great parties are held.
The waiter brings the bill.
Nine pays with a corporate account it doesn't come out of his pocket.
Ten owns the corporation that will claim it as a business expense so he doesn't have to pay taxes. Only the little people pay taxes.
And thats how taxes really work.
The poor don't get to sit at the table the middle lives on hope, the upper middle pays but worries, the lower upper hangs on, the top tier laughs at the rest of them.

Answer 3

Your hypothetical question is irrelevant and a farcical oversimplification. Current tax brackets range from 10% to 35%

But, this is for 'income'. Capital Gains and other forms of income (stock options) and inhearitance that most lower or middle-income wage erners don't recieve as compensation are taxed at different rates, if at all.

The foremost reason for the continued and increasing gap between the richest Americans and the poorest is due to the current tax structure.

Answer 4

Good story. And it's an easy way to explain the tax system. But our tax system is not easy, nor simple. There are many more loop holes and ins and outs then are describe in that story. To take an extremely complicated subject and break it down into a short story is to leave out a lot of information.

Answer 5

Ah, poor little rich kids... you're all so put upon! Why are we giving money to all those starving kids in Africa when I'm having to think twice about my skiing vacation this year?! The whole thing stinks!

Since your arithmetic is plainly so, ahem, "poor" it's barely worth taking the time to explain how ******** your pitiful example was, but since you plainly don't understand the full implications of the tax and benefit system see if you can get your big subsidised brain round this:
The poor are maintained at the barest minimum for one reason only - to stop them from getting so desperate that they rampage through the streets and string up the likes of you from a streetlight.

Be grateful your tax dollars are spent so wisely, rich boy.

Answer 6

Your fine liberal friends were out getting an education in logic and economics, something that apparently you missed. In the first instance you ignore the fact that taxes are based on a calculation of income after deductions. If you structure the deductions to favor one group you will alter the amount of taxes paid. Without calculating this in your cutsie little story your conclusions are simple minded. You might also consider that senior management in corporations are seldom compensated solely in income. Stock options, perks such a car and drivers, health insurance are all a part of an income package that is treated differently for tax purposes.
I could go on but I know I am pushing the limits of your intellectual capacity as it is. I will leave the rest to my fine liberal friends who have developed a tolerance for the mentally challenged.

Answer 7

This is indeed a powerful example, and a valuable lesson.

The only response is usually along the lines of "wealth is evil" or "punish the rich."

A flat tax (perhaps with some exemption for low-income folks) would go a long way towards solving the inequities your example very ably points out.

If those paying substantially all the taxes make up less than half the electorate, the temptation to "confiscate" their assets through taxation becomes irresistable and the incentive to work, save, invest and take risks disappears.

That's not good for anyone.

Answer 8

Good example. No matter what's done, someone will always find some fault.

Democracy is a poor from of gvmt. As you shown, it's like 2 wolfs and a sheep voting on what's for dinner.

This is why the federal gvmt should be kept very, very small and taxes to the feds should be voluntary.

You sound like you're a reader of Ayn Rand. Am I right?

Answer 9

How many liberals have read this?
Quite a few I'm guessing and they are all equally outraged and want to force the tenth man back to the nightly dinners.

How dare he leave these people in desperate straits?

Answer 10

First, this isn't really a question,but I'll answer anyway--no, I haven't heard this before. In addition, this metaphor bears absolutely no similarity to taxes. First, most taxes are paid by corporations, and many corporations have no choice about paying taxes in the U.S., if they want to continue to do business here (yes, they could leave, but it would ultimately ruin them as well--imagine there was no other restaurant in town). Second, refering to income tax, when the government lowers the tax rate, the poor don't generally complain. However, they do complain when necessary servies are cut. Don't forget, most people are poor because the government and ociety in general treats them inequitably from birth. If you are born poor, and thus eat lower quality food, your brain won't develop as well. Then, if you go to public school where the teachers hate their jobs and there is rampant drugs and violence, you have a very small chance of being educated well enough to achieve economic success. Until the government starts funding all schools equally, ends racial and gender discrimination, it is ethically appropriate that we disproportionately tax the wealthy.

Answer 11

Couldn't give a Rhino plop Less about Taxes.. Why don't we Talk about REAL Concerns like: Why on Sept. 11th. at Booker Elem. did MonkeyPuppet after Andrew card informed that not only WTC1, but at 9:05am. that WTC2 was ALSO Hit by a Commercial Airliner. And the FOOL, Just SAT THERE, for Like TWELVE MINUTES. !! and the Secret Service Idiots, INSIDE the Classroom, Just STAND THERE. !! Like Nothing is Happening. ?? There is ABSOLUTELY NO Justification of This, all except for The CRIME of HIGH TREASON. Bushe KNEW. !!! http://www.911inplanesite.com/media/ips_ps_trailer2006.wmv .. http://www.ihr.org/leaflets/iraqwar.shtml