Snip Snip!
Explanation of a Tax Cut:
Suppose that every day, ten men go out for dinner. The bill for all 10 comes out to $100. If they paid their bill proportional to current tax demographics, it would look 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.
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 curveball. "Since you're all such good customers," he said, "I'm going to reduce the cost of your meal by $20." So now the dinner for ten only cost $80. The group still wanted to pay the bill the way we pay our taxes. So:
The first four men were unaffected (still paid nothing). But what about the other six? How could they divy up the $20 windfall so that everyone still would get his "fair share"? The six men realized that $20 divided by 6 was $3.33, but if they subtracted that from everybody's share, the fifth and the sixth men would be "paid" to eat their meal. So the restaurant suggested that it would be fair to reduce each man's bill by roughly the same percentage amount, so he proceeded to work out the amounts each should pay:
The fifth man, along with the first four, now paid nothing (100% savings).
The sixth man now paid $2 instead of $3 (33% savings).
The seventh man 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).
After this, the men began to compare their savings. "I only got one dollar out of the 20, but he got 10," declared the sixth man.
"Yeah, that's right," said the fifth, "it's not fair that he got $10 more than me!"
"That's true!" said the seventh, "Why should he get $10 when I only got $2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four in unison. "We didn't get anything at all! This system exploits the poor!"
The next night, tired of being harrassed, the tenth man didn't show up for dinner, so the other nine ate without him. But when the eighty-dollar bill came, the men realized that they had a lot of money to make up. They didn't have enough money between all of them to pay for even half of the bill!
This is how our tax system works, folks. The wealthy do get the largest tax breaks, but they are already paying a vast majority of our nation's taxes to begin with.
Dr. David Kamerschen
Distinguished Professor of Economics
University of Georgia
-Just thought everyone would like a more simple way to look at tax cuts! Hungry anyone?
Suppose that every day, ten men go out for dinner. The bill for all 10 comes out to $100. If they paid their bill proportional to current tax demographics, it would look 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.
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 curveball. "Since you're all such good customers," he said, "I'm going to reduce the cost of your meal by $20." So now the dinner for ten only cost $80. The group still wanted to pay the bill the way we pay our taxes. So:
The first four men were unaffected (still paid nothing). But what about the other six? How could they divy up the $20 windfall so that everyone still would get his "fair share"? The six men realized that $20 divided by 6 was $3.33, but if they subtracted that from everybody's share, the fifth and the sixth men would be "paid" to eat their meal. So the restaurant suggested that it would be fair to reduce each man's bill by roughly the same percentage amount, so he proceeded to work out the amounts each should pay:
The fifth man, along with the first four, now paid nothing (100% savings).
The sixth man now paid $2 instead of $3 (33% savings).
The seventh man 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).
After this, the men began to compare their savings. "I only got one dollar out of the 20, but he got 10," declared the sixth man.
"Yeah, that's right," said the fifth, "it's not fair that he got $10 more than me!"
"That's true!" said the seventh, "Why should he get $10 when I only got $2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four in unison. "We didn't get anything at all! This system exploits the poor!"
The next night, tired of being harrassed, the tenth man didn't show up for dinner, so the other nine ate without him. But when the eighty-dollar bill came, the men realized that they had a lot of money to make up. They didn't have enough money between all of them to pay for even half of the bill!
This is how our tax system works, folks. The wealthy do get the largest tax breaks, but they are already paying a vast majority of our nation's taxes to begin with.
Dr. David Kamerschen
Distinguished Professor of Economics
University of Georgia
-Just thought everyone would like a more simple way to look at tax cuts! Hungry anyone?
posted by Brad at
12:31 PM
3 Comments:
At most dine-in Mexican restaurants, I've been able to dine for two at $20. Midlevel places cost about $35-40 and the high end (well, for our area) is about $60.
I've spent $60 on both a sushi dinner and a lobster dinner. Makes no sense, considering you don't cook sushi.
The "rich" clearly pay the most taxes. Roughly about 50% of their income goes to taxes, already, and I shudder to think some want it higher.
I think you can get two super-sized number 4's at McDonalds for roughly 10 bucks
Fred,
Interesting point. I've thought the same thing before when watching stuff like "Cribs" or "The Fabulous Life Of...", would they really even notice it? I'm guessing the answer lies in the actual figures, for example, if the top 1% is a lower than expected number, such as $500,000, they might likely notice a $50,000 difference. But if the top 1% is like 10 million, then maybe not. In any case, I'm in no position to comment for sure!!
PS- I agree about Mickey D's. NEVER AGAIN!!
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