Tax consulting for dummies

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[robjna]

Subject: How the US tax system really works; an illustration.

With all the talk about Bush's tax plan - I thought this illustration might help those who still think the wealthy get all the tax breaks.

Let's put tax cuts in terms everyone can understand. Suppose that every day, ten people 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 people-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 person-the richest-would pay $59.

That's what they decided to do. The ten people 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." (For those NOT following, this is called a tax cut.)

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 people 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/her "fair share?"

The six people realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth and sixth persons would end up being *paid* to eat their meal.

So the restaurant owner suggested that it would be fair to reduce each paying person's bill by roughly the same amount percentage-wise, and he proceeded to work out the amounts each should pay.

And so the fifth person paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth person with a bill of $52 instead of his earlier $59.

Each of the six were 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 person.

He pointed to the tenth. "But he got $7!"

"Yeah, that's right," exclaimed the fifth person. "I only saved a dollar, too. It's unfair that he got seven times more than me!"

"That's true!" shouted the seventh person.

"Why should he get $7 back when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four free-loading people in unison, "We didn't get anything at all. The system exploits the poor!"

The nine people surrounded the tenth and beat him to a pulp.

The next night he 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 were $52 short!

And that, boys and girls, main stream media journalists, Democrats and liberal college professors, is how the US tax system works.

You keep screwing with the wealthy and they will take their money elsewhere or Quit the system because it costs too damn much to play the game.

Then who is going to pay for all those touchy-feely social programs? Too many consumers and not enough producers is the track this country is on. Bye-bye Miss American Pie!

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