TAX System Explained In Simple Terms

[chuckandkim 0]

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 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

eating overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, PhD

Professor of Economics

University of Georgia

[beameup 0]

Excellent illustration.

Then why do the LIBERAL DEMOCRATS bemoan "tax cuts for the rich"?

Oh no ..... could it be "propaganda" techniques derived from Karl Marx? ..... Oh no, say it isn't so!

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 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

eating overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, PhD

Professor of Economics

University of Georgia

Edited March 1, 2007 by beameup

[GaryC 7]

Please don't explain things like this. It confuses the libs that are always chopping the rich. Let them live in their false utopia. The way they see it the rich should pay more and the poor should be paid to eat. That is their idea of "fair".

[chuckandkim 0]

HAHAHAHA, I'm sorry if i confuse the libs.... But it is true this is how tax works in america...

[Hilarious Clinton 452]

Liberal required reading.

[Jenn! 918]

Oh, it all makes sense now. Sign me up as a republican!

[Heracles 417]

Please don't explain things like this. It confuses the libs that are always chopping the rich. Let them live in their false utopia. The way they see it the rich should pay more and the poor should be paid to eat. That is their idea of "fair".

Of course. Those rich bastards should be pay more, even though they use less..

Disclaimer: The above does not apply to rich liberals.. That is different, especially when the money is old money or earned through means of acting, singing or sport..

[chuckandkim 0]

For the record,

David R. Kamerschen, PhD

Professor of Economics

University of Georgia

Did not write this piece, according to many internet websites. But you know what, everything is true if it's on the "internet"

I'm not sure how it works in real life, but this sounds pretty good. Too bad, the middle class is beaten up so bad, we can't even see the light of day at 12PM.