Apologies to anyone that might have seen this before but it is worth reading.
This is a simplified explanation from an educated man. A BRILLIANT explanation of our tax system, the Bush
tax cuts, and the public reaction using actual percentages.
Tax system explained in terms of beer - to make it more manageable
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 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 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!
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.
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"Banning guns is an idea whose time has come."
- Joseph Biden
Associated Press 11/18/93
"Be thankful that we're not getting all the government we are paying for." Will Rogers
I posted that a while back, buts it still worth another read.
Where are the Obama followers??
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I love Christmas lights. They remind me of the people who voted for Obama. They all hang together; half of them don't work, and the ones that do, aren't that bright.
For those who understand, no explanation is needed. For those who do
not understand, no explanation is possible.
A golf course is a willful and deliberate misuse of a perfectly good rifle range.
A smart man! To bad so many politicians are to ignorant to understand this very basic principle.The top 1 percent of income earners in our population pay 39.3 % of the entire income tax collected by the IRS.The top 5% of income earners pays in excess of 59% of the entire nations income taxes.The top 10% of income earners pays in excess of 70% of the entire nations income tax.
50% of our nations income earners pay less than 4% of our entire nations income tax.It is obscene to pile it on the business owners and those with entrepenurial spirit! It sends jobs over sea's,it down sizes companies when owners say screw it I can have a lot less head aches and aggravation with less employee's and make similar money.It is a disincentive for all business's especially those that are right on the cusp of how the changes in the tax code would influence them.
Obama is intent on eliminating the cap on social security taxes once income reaches $102,000,yet he says that only those earning over $250,000 will be effected.So he isn't actually being straight forward about that.While $102,000 for an individuals income is very significant it is a long way away from $250,000.He is talking about forcing small employers to pick up at least the tab of 60% of the medical insurance expense for their employee's.The same thing will result,the laying off of employee's.There are many,many business's that are not in a position to pick up $6000 per year per employee to provide coverage for a an employee and their family.He is very misguided with these things!
How our Tax System works
