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Thread: Tax Cuts, For the Rich

  1. #1
    Senior Member
    Join Date
    Aug 2009
    Posts
    603
    ECONOMICS LESSON-
    CLEAR EXPLANATION OF TAX CUTS
    Sometimes politicians, journalists and others exclaim; "It's just a tax cut
    for the rich!" and it is just accepted to be fact, without questioning it.
    But what does that really mean?
    Just in case you are not completely clear and/or do not understand
    this issue, the following should help, if you are a reasonable person.
    Let's put tax cuts in terms everyone can understand.
    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 on 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 of you 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 on a percentage basis rounded to the nearest dollar, 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 $50 instead of $59 (15% 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 $9!"
    "Yeah, that's right," exclaimed the fifth man. "I only saved a
    dollar, too. It's unfair that he got nine times more than I!"
    "That's true!!" shouted the seventh man. "Why should he get $9 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 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 somewhere
    else where the atmosphere is friendlier.
    David R. Kamerschen, PhD
    Professor of Economics
    University of Georgia
    =

  2. #2
    Racey
    Perfect example right there, i love it when people say 'tax break for the rich', imagine giving almost half of what you make away!
    Funny how in America the more successful you are the more penalized you are.

  3. #3
    vee-driven
    Not to mention the rich employ most of the middle class so with out the rich hello welfare and unemployment.

  4. #4
    photo chick
    Such a fitting subject for me to post my 2000th post. Got a substantial raise a few days ago. Like all other raises most of it went to taxes. I complain every year but this year really sent me through the roof, guess cause I have tons more bills than any other year!
    Several people in my family complain about how rich people are always getting breaks!! Then they blame it on the Republicans...Haa! I just gave enough to the IRS to pay my entire immediate family's taxes for three years! I'm not even rich! Do I use the streets, air, lakes, President...whatever.. the US provides us with more than they do? No! Not to mention those with more money tend to spend more which...we pay for tax on everything, including hotel rooms, luxury cars, boats, motorhomes, airplane tickets, bla bla bla!
    Something else I always hear..."The rich can afford to hire someone to do their taxes so they can get all the tax breaks" Really? I think those tax breaks are available to everyone, you just have to know enough to buy TurboTax and own a computer...
    OK I feel so much better now.......Thanks for listening....now I don't have to go talk to a therapist I love HB!

  5. #5
    Jbb
    Such a fitting subject for me to post my 2000th post. Got a substantial raise a few days ago. Like all other raises most of it went to taxes. I complain every year but this year really sent me through the roof, guess cause I have tons more bills than any other year!
    Several people in my family complain about how rich people are always getting breaks!! Then they blame it on the Republicans...Haa! I just gave enough to the IRS to pay my entire immediate family's taxes for three years! I'm not even rich! Do I use the streets, air, lakes, President...whatever.. the US provides us with more than they do? No! Not to mention those with more money tend to spend more which...we pay for tax on everything, including hotel rooms, luxury cars, boats, motorhomes, airplane tickets, bla bla bla!
    Something else I always hear..."The rich can afford to hire someone to do their taxes so they can get all the tax breaks" Really? I think those tax breaks are available to everyone, you just have to know enough to buy TurboTax and own a computer...
    OK I feel so much better now.......Thanks for listening....now I don't have to go talk to a therapist I love HB!
    Enough ranting woman.....now go make me a sandwich.....

  6. #6
    photo chick
    Enough ranting woman.....now go make me a sandwich.....
    Knuckles ok today in that sandwich honey?

  7. #7
    That Guy
    Knuckles ok today in that sandwich honey?
    I'm more concerned that you have 2000 posts in 4 months....:idea: :2purples: :2purples:

  8. #8
    photo chick
    I'm more concerned that you have 2000 posts in 4 months....:idea: :2purples: :2purples:
    Pretty scary ehh? I blame it on the weather in Texas

  9. #9
    CA Stu
    Knuckles ok today in that sandwich honey?
    Moose knuckle?
    Thanks
    CA Stu

  10. #10
    That Guy
    Pretty scary ehh? I blame it on the weather in Texas

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