Taxes Put Into Perspective
Moms View Message Board: The Kitchen Table (Debating Board): Taxes Put Into Perspective
Got this in an email. This could not better describe my feelings on taxation. Any of you agree/disagree? Why?
Today's Economic Lesson in Taxation
Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. 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 $7.
* The eighth $12.
* The ninth $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."
So, now dinner for the ten only cost $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, the paying customers? How could they divvy up the $20 windfall so that everyone would get his 'fair share'?
The six men 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 $2? 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!
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 at the table anymore.
LOL Amy!
I posted that same one about a week ago on another thread here!
http://www.momsview.com/discus/messages/3743/28448.html
I totally agree!
Honestly, I believe that there is definitely a class warfare going on in this nation, and I believe that it has been a cause that has been championed by the perhaps well meaning but misguided party that claims to be for the working class. The people who believe in taxing the hide out of the rich man don't understand that it is the rich man who provides jobs to the working class. Tax the hide out of him, and you may not have a job much longer.
Kerry has said he will not raise taxes. Instead he will roll back Bush's tax cut for the rich(over $200,000). Isn't that like- raising taxes? Who all does that section of people include? Perhaps people who provide jobs?
I agree that the story is right on in terms of income tax but misleading in terms of general taxation.
Income tax is just one form. There are taxes I pay at the grocery store, the gas station, when I buy a car, when I buy shingles for the roof, when I buy real estate and none of that takes my income into consideration. They are all taxed at a certain set rate. Seems fair eh (the 'eh' is my Canadian content  ), everybody pays the same?
Except with taxes like those above, relative to income, we don't pay the same. We had to get a new oil tank last year and the taxes we paid on the tank and labour were the same as someone would pay if they were earning a quarter of a million dollars a year. Except we earn $25,000 (Canadian, knock around a third off that for the american equivilent I think) a year. So the taxes on the tank and labour represented a much bigger part of our income then they would for someone with a lot more money. My neighbour up the road who's struggling through a divorce and driving an ancient suburban she can't afford to replace is paying the same in taxes on fuel as someone with a much higher income and a new suburban. For my neighbour it's a painful bite out of a small income, for the other person it's hardly an annoyance.
Sales taxes and such penalize people with small incomes, giving them a tax burden that, relative to income, is much higher than those who earn a lot more. I think the way our respective income tax systems work, with the rising scale is, in part, an attempt to address that. Is that fair? I'm not sure but any discussion about the fairness of taxation can't ignore the system as a whole and only focus on certain pieces of it.
"The people who believe in taxing the hide out of the rich man don't understand that it is the rich man who provides jobs to the working class. Tax the hide out of him, and you may not have a job much longer"
Two things about this comment. It's not just the rich who provide employment. A lot of people in Canada at least are employed by medium and small businesses, not run by people who are 'rich'. Many others are employed by publically traded companies run by people who've been hired by virtue of being good at their jobs, not simply because they're rich.
And if the problem is becoming a class one the attitude that we should tread carefully around the rich and be thankful for what they provide isn't likely one that will do anything but further divide people. The only thing that will help is discussing all the problems surrounding taxes, not simply our own interests and seeing all involved as people first, rather than 'rich', 'poor' or 'working class.
I'm not sure where I fit in those labels. I know we make relatively little but we also don't have a lot of debt and generally can buy what we want and don't regard not being able to afford some things as a burden. I think if we could divorce income from the concept of wealth, that's what we'd be, wealthy.
Two things about this comment. It's not just the rich who provide employment. A lot of people in Canada at least are employed by medium and small businesses, not run by people who are 'rich'.
YOu know that one person may not be rich, but the company probably pulls in over 200k, which is our defintion of rich that the taxes are trying to be rolled out. I mean think of this a small business that pays each worker 25k a year, only has to have 8 employees to know they have to be clearning 200k. So you are right, they aren't rich and if we roll back those taxes, those small business are EXACTLY who will be hurt.
Excellent point, Kaye.
Kaye, a business which pulls in 200K a year will have expenses which are deducted from taxable income and a whole lot of other deductions and writeoffs (depreciation, for one). A business which pays 8 employees 200K a year is not "clearing" 200K, it has 200K in deductible business expenses, which reduce the taxable income. In all likelihood, a business which employs 8 people at 25K a year (your 200K) has to have before tax income of at least 400K in order to stay in business, but will probably pay taxes on (that is, "clear" or "net") only 10-25% of that incom, well below the 200K mark. And, what Kerry is talking about is individuals who have income (whether earned or from interest, stocks, etc.) 200K or more a year, not businesses. Despite what Bush is saying, according to all the statistics I have seen from neutral sources, something less than 5% of "businesses" ("S" Corporations) would be affected.
Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
>>>>>>>>>>>>
This has been on my mind all day because if they're not going to show up, where are they going to go? Leave the country and head...where? Canada? The taxes are much higher here. The UK? Same deal. Europe? Pretty much the same there too. The U.S. has pretty much the lowest income tax rate in the western world.
I agree attacking the rich because they're rich is uncalled for. I've witnessed politicians try to score points with voters by using that tactic but goodness, the arguments above did nothing to counter those attacks. Let us keep more of our money or we might leave. Let us keep more of our money or you might fnd yourself out of a job. I know and have known lots of people with lots of money and they're mostly good honest people with more on their mind and more to concern them then their money. If people are to be convinced that income tax rates are unfair there should be some solid reasons (and I've heard good economic arguments for flat rates before so I know they're out there).
Might this not be the wrong time to be campaigning for tax cuts? The U.S. has a montrous deficit of around $450 million dollars and is fighting a war that can only dig that hole deeper. Tax cuts when the gov't is bleeding money seems at the least irresponsible (and yeah, I know it's already been done). But you guys aren't arguing for it today I guess, just saying it needs to be addressed.
Neat discussion this.
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