Posted on 02/16/2014 3:31:12 PM PST by workerbee
Good one!
Cute, but it is not how government stimulus works, and anyone who has taken accounting 101 would know that each of those individuals had $100 credit and $100 debit on their books, with a net asset of zero before the stranger came ito town. After the stranger left, everyone had zero credit and zero debit, with the same zero net asset.
bttt
True. Now everyone is now debt free, have established credit worthiness, and they are all still broke.
Assuming all these tax payers are in the 25% tax bracket
The butchet, pig farmer, co op owner, prostitute and hotel owner each owe $25 now to the IRS
the government just made $125 for doing nothing
Wrong. With the "government stimulus package", the $100.00 bill is taken from the taxpayer and laid on the hotel desk. And the taxpayer never sees it again.
The only problem is that all of those transactions, with the possible exception of the prostitute, would have been taxed by local, state and federal governments reducing the $100 each time the bill changed hands.
The government would then borrow $17 trillion more dollars and everyone is still in debt!
“And the taxpayer never sees it again.”
the taxpayer will see it another form called pork’
Well, that’s just great...
except -
The hotel owner is now $100 poorer because he suddenly has neither the cash, nor the outstanding receivable.
Great one. I got to remember that.
Another problem: if anyone in town owes $100 to China, that $100 bill is GONE.
No, he will not see his $100.00 again, it's gone.
As for pork barrel spending, even in it's hay day, it represented no more than 1-1.5% of total tax revenues. The taxpayer was seeing a penny in pork for every dollar the government took from him.
Winner
There's no free lunch everybody. In this case, the hotel owner got screwed and he didn't even get to enjoy the services of the prostitute.
Thank you. I was about to say something similar.
Emailed it on. Thanx!!
Really no different than Bob owing Bill $100, and Bill owing Bob $100. They swap notes and presto, no debt. The $100 in this scenario serves the same function, but so too would a reversal of order in services provided.
The hotel owner is not $100.00 poorer. Remember, he settled his debt to the butcher.
Not eally. In most cases that $100 revenues was offset by an accounts payable - meaning that it produced zero taxable income.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.