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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.
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 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 paid $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!
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.
You are missing one important thing...
With Obama, the first 4 people that dont pay, are going to get money for not paying.
Okay. Can I assume you also disagree with Bush's stimulus packages?
Correct. I was outraged at the idea, just as I was outraged at the Wall Street bailout, just as I am outraged at the entire concept of yearly "stimulus checks" in the form of tax rebates just for being alive in the USA.
Quote:
Originally Posted by nvxplorer
Yet, taxation still redistrbutes wealth, which is the point of the OP. Everyone does not benefit equally (or much at all). The owner of a taxi company benefits far more from highway funds than someone who doesn't drive, for example.
The person who doesn't drive *chooses* not to do so, just as I choose to buy books instead of visit the tax-funded public library. I have no choice in using services of money spent when it's given to a specific person as a rebate check at the end of the year just for being a citizen of the USA. If they buy a 6-pack with it, I don't have the choice of having a beer with them.
Quote:
Originally Posted by nvxplorer
These checks are meant to stimulate the economy. We have a consumer based economy. The wealthy already have more than enough money to buy everything they need. What's left over goes into investment - the stock market. We see what's happened with that. If average people can't afford consumer goods, stocks lose value.
Then put it directly into the economy by doing something like reducing corporate taxes or reducing capital gains! Don't give it to people to fund only specific parts of the economy or stick in the mattress to have no effect on the economy at all! If someone spent their $600 on imported goods through a non-American company or buying someone under the radar like a bag of marijuana, how does that "stimulate our economy?"
The stimulus checks are a scam to increase ratings of both president and congress for the hope of boosting an upcoming election, and if they could claim it helped the economy, they'd take it. If they had instead announced that capital gains taxes would be reduced by 5-10% on all stocks purchased after the date the announced the "stimulus checks" until the sale of the stock, investment in the stock market would have boosted the economy better than buying votes from the public.
But that 40 % includes those after taking advantage of deductions and credits pay zero and those who are claimed by another, and many who file separately, and many others. No tax liability is more then just those who choose not to work.
Why do the rich pay less as a percentage of their individual incomes than the middle-class?
They don't.
The rich pay between 33 to 35% the middle class pay between 25 and 28% and the poor pay 15%. The really poor (<8,000/year) pay 10%.
The top 50% of wage earners pay 97.12% of all taxes collected and the bottom 50% pay 2.88%.
Basically, in our society, one person pulls the cart while the other rides in the cart.
Why did you think that the rich pay a lower percentage?
No you merging to things, taxpayers with non-taxpayers.
And rebate checks were never the "issue" Taxes are the 24/7 issue with the GOP.
I don't want to pay taxes either. But mature adults realize that it costs money for our complicated infrastructure to work.
It's this extreme anti-tax mentality that helped perpetuate an aging transportation infrastructure too. How many more Interstate bridges must collapse before we realize that these bridges etc built in 1955 need to be updated...
All taxes would not spread the wealth, if everyone was taxed at the same rate, and the taxes used for basic purposes like the Military, instead of being used to buy votes!
Mature adults understand that the federal government is not only, not the only entity to procure funds and build infrastructure but they are the worst at it!
The rich pay between 33 to 35% the middle class pay between 25 and 28% and the poor pay 15%. The really poor (<8,000/year) pay 10%.
The top 50% of wage earners pay 97.12% of all taxes collected and the bottom 50% pay 2.88%.
Basically, in our society, one person pulls the cart while the other rides in the cart.
Why did you think that the rich pay a lower percentage?
Deductions, credits, shelters, oil depletion allowances, etc. After those adjustments, you have the EFFECTIVE TAX RATE, as opposed to the NOMINAL TAX RATE you see in the Tax Tables shown in your tax return booklet.
In the end it doesn't matter who's elected because in rich people will not give up there position. If they run taxes up they will make adjustments to there businesses and investments to get the money back hire less people, pay less, work them harder, lay off, raise prices etc. This is what the politicians don't want anyone to know.
What I like best is I do most of my buisness on American Express Frequent Flyer Miles cards. So I get free plane tickets quite often. So I go to Europe often and with relatives having homes in Germany and Spain I always have a Place to stay. Save a lot of money that way. I do understand how the poor get jealous and love someone like Obama. The wealthy do live good. But they all have worked hard and used there brains to get there.
I use to be poor when I was young, but I was so envious of my parents and relatives that I realized I needed to quit complaing and blaming everyone else for my screwups. Spent many years working hard and it is starting to pay off.
Deductions, credits, shelters, etc. After those adjustments, you have the EFFECTIVE TAX RATE, as opposed to the NOMINAL TAX RATE you see in the Tax Tables shown in your tax return booklet.
Please. just look at the numbers, is plain and simple.
Deductions, credits, shelters, oil depletion allowances, etc. After those adjustments, you have the EFFECTIVE TAX RATE, as opposed to the NOMINAL TAX RATE you see in the Tax Tables shown in your tax return booklet.
So are you trying to say that the rich are the only ones who get deductions?
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