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  1. #1
    Join Date
    Sep 2004
    Location
    Florida, USA
    Posts
    13,201

    Tax Cuts Explained

    I got this is email and thought it was a geat analogy for people who wonder how tax cuts work and how they don't work.

    TAX CUTS ?

    The 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:

    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 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:

    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 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!

  2. #2
    Join Date
    Mar 2005
    Location
    The Cloud of Unknowing
    Posts
    17,425
    That is one side of the story. It is also well documented, that those who profit most of the schemes put forward by various governments in an absolute sense are the richer people.

    Over here for example we have state pensions. You are forced to pay premiums for your whole working life, and get the benefits after 65, as an monthly income. Premiums are not income dependent.

    What happens is that those who start working later (for instance because they went to college) pay less for the scheme, and have a life expectancy far above average, thus profiting more from the scheme. And the same people who went to college are on average richer than those who did not.
    In short, the people who started working earlier are mostly paying for a scheme they barely see money for.
    The butterfly counts not months but moments, and has time enough. - Rabindranath Tagore

    Keep true to the dreams of your youth. - Friedrich Schiller

    The only philosophy which can be responsibly practised in face of despair is the attempt to contemplate all things as they would present themselves from the standpoint of redemption. - Theodor Adorno

  3. #3
    Join Date
    Sep 2004
    Location
    Florida, USA
    Posts
    13,201
    Our Social Security System isn't so stable right now either. It was set yup for a short term quick fix. It was never intended to go on and on. What kind of moron can't figure out that with the population explosion Group A, with less people can't finance the retirement of Group B with more people. Truth is, people need to quit expecting their government to finance their life. That's nothing short of a socialistic, which is a nice term for communistic, mentality.

    My parents have quite a bit of land, two homes, a motorhome, 2 new vehicles, and a motorcycle. They still get UPSET because the government might cut their free health benefits. Come on....that's just stupid. Our whole babyboomer age group is sucking our country dry and trying to blame the government on it.

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