(I figured that title would grab the attention of my readers!) You have got to read this parable that clearly explains the US tax code, and what Obama is planning to do with his “tax cut for 95% of Americans,” 40% of which do not pay any income tax.
But first, the story:
A brilliant explanation of our tax system using actual percentages, the impact of a tax cut, and the public reaction that everyone should be able to 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 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. 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 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 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 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, or will not understand, no explanation is possible.
(only read on if you promise to engage your mind, not your emotions, please.)
I am amazed at how many people are for Obama IF they understand his position on taxes and what he will do to our economy with a most-likely liberal Congress and House. It will be the first time in over 40 years that the White House and Congress/House will be controlled by the same party, and the anti-business / pro-high taxes / bigger government party. His rhetoric not only doesn’t match his record (never once voting for a tax cut and 94 times for a tax increase or against a tax cut) but his math doesn’t add up, or results in socialism. Again, for those willing to look beyond the eloquent rhetoric and look at the man’s real record, writing and the philosophies of those who he names as his influences and mentors in his extremely short political carreer.
- Obama will effectively raise taxes on all Americans (except those not paying any) when he allows the Bush tax cuts to expire. He can say he didn’t raise taxes, but that’s like a fireman refusing to turn on the hose saying he didn’t burn the house down. Obama can raise taxes by doing nothing.
- 40% of Americans pay no income tax. A “tax credit” to them is a hand out or welfare check, essentially buying future voters, as to reverse that would be nearly politically impossible.
- The bottom 50% of Americans pay only 2.9% of the federal tax burden. The top 10% pay 70% of the tax burden. We already have redistribution of wealth – more will only hurt our economy more.
- The government does not create jobs. (Other than federal employees, but the tax payers pay 100% of all their salaries, benefits and retirement.) “Evil” businesses and corporations create jobs. The more the government takes from companies, the less jobs they can create and the government takes in less money, and then they take more, and the downward spiral is devastating to the economy. Companies exist to make more money and every dime they get to keep is spent growing the company which results in new jobs and… more income for the government as a result.
- Every single time taxes are lowered, economic growth results. The Bush tax cuts brought in unprecedented income to the federal government. Record cash into the government cophers!
- The deficit was not created by the Bush tax cuts, it was created by Republicans and Demoncrats spending MORE than taxes brought it.
- Bush’s greatest failure was not the tax cuts, it was his inability (or willingness) to curb spending. Out of control federal spending on shaky credit created our current government fiscal crisis. Lower taxes actually brings in more money to the government. Democrats do not raise taxes so much as to get more income, but as a means of control and vote collection.
- Raising taxes is the WORST POSSIBLE THING for our nation and economy. The BEST THING IS NO NEW TAXES and CONTROLLING SPENDING. I only hear one candidate and VP talking about less taxes and less spending.
There is a lot to like about Obama – but his economic plans for our country are disasterous. Imagine if you ran your home the way Obama wants to run the country. The government can try to “bail out” others, but who bails out or “rescues” the governemnt when it goes awry? YOU. The taxpayer.
You now work from January into July just for all the taxes you pay, income tax, state taxes, property taxes, sales taxes and taxes included in the products you buy and services you use. And Obama wants you to pay even more. Your “fair share.”
Anyone who votes for him can’t complain later when the tax man comes and the economy suffers – your vote is surrendering your wallet to more government control and more of your hard earned money going into the sink hole of the US government.
A vote for McCain/Palin isn’t the solution to everything – but it is the best way to hold the greed of the federal government and keep more taxes at bay for at least four more years.
Please vote, and vote Republican.
Sincerely, your fellow tax paying American.
(Click image to see full size)