Understanding your taxes! - DFWstangs Forums
 
LinkBack Thread Tools Display Modes
post #1 of 2 (permalink) Old 03-14-2008, 03:40 PM Thread Starter
Time Served
 
Join Date: Dec 2004
Location: Mansfield
Posts: 538
Understanding your taxes!

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. What
happens to 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 peop le 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

1992 LX Hatch
331 Stroker (Z06 Eater)

I've had this thing since it was new. It's 17 years old and now it's new again.. LOL

gixxerrob is offline  
Sponsored Links
Advertisement
 
post #2 of 2 (permalink) Old 03-14-2008, 08:28 PM
Time Served
 
Join Date: Jun 2007
Location: 29 Palms
Posts: 566
understood
CECILMACK2704 is offline  
Sponsored Links
Advertisement
 
Reply

Bookmarks

Quick Reply
Message:
Options

Register Now



In order to be able to post messages on the DFWstangs Forums forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.

Password:


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:
OR

Log-in










Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page
Display Modes
Linear Mode Linear Mode



Posting Rules  
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On

 
For the best viewing experience please update your browser to Google Chrome