Posted on 10/11/2010 6:22:47 AM PDT by freedomfox
Fairness is the mystic mantra of the left, and so when Obama responds to cries for extending the Bush tax cuts, he conjures the spirit of fairness. It is hard to argue against the vague, sweet whisper of fairness. Leftists, in tax policy, read fairness only one way: those who earn more pay more. That certainly redistributes wealth from the more productive to the least productive members of society, but is it fair?
(Excerpt) Read more at americanthinker.com ...
This has been around a few times, but again - in the interest of understanding the “fairness” of the tax system:
This was written by Professor David Kamerschen, PhD with University of Georgia’s Department of Economics.
So, here goes...
A brilliant explanation of the US tax system using actual percentages, and the impact of a tax cut.
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.
It’s never “fair” to take what someone else has earned by force. That’s called theft.
The only reason for a tiered tax system is so that everyone can pay something. I understand that people need a certain, basic amount of money to live so a true flat tax, while good in theory, probably isn’t workable in practice. You want everyone to pay something. Thus, tax the first X dollars at, say, 5%, then increase it to a flat 20% on income about a certain amount. The moral hazard creeps in when you have extra tiers. If any wealthy person believes he or she is not paying enough, give to charity. Charities will do a much better job of getting money into the hands of the poor than government bureaucrats.
Social Justice is not justice for all. It is a qualified justice for some. It is justice for those who fall into the privileged social group. Making things unjust for everyone else.
I agree with the FAIR Tax. Everyone pays. If you don’t want to pay, you save.
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