Posted on 08/05/2002 5:59:13 AM PDT by Blood of Tyrants
A Middle Tennessee accountant relays the following story.
I was having lunch with one of my favorite clients last week and the conversation turned to the government's recent round of tax cuts. "I'm opposed to those tax cuts," the retired college instructor declared, "because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and I and that's not fair."
"But the rich pay more in the first place," I argued, "so it stands to reason that they'd get more money back." I could tell that my friend was unimpressed by this meager argument. Even college instructors are a prisoner of the myth that the "rich" somehow get a free ride.. Nothing could be further from the truth. Let's put tax cuts in terms everyone can understand.
Suppose that everyday 10 men go to dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59.
The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until 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. Now dinner for the 10 only costs $80.
The first four are unaffected. They still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth man and the sixth man would end up being paid to eat their meal.
The restaurant 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 paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59. Outside the restaurant, the men began to compare their savings. "I only got a dollar out the $20," declared the sixth man pointing to the tenth, "and he got $7!" "Yeah, that's right," exclaimed the fifth man. I only saved a dollar, too. It's unfair that he got seven times more than me! "That's true," shouted the seventh man. "Why should he get $7 back when I got only $2? 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 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 and college instructors, is how the 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 at the table anymore. There are lots of good restaurants in Switzerland and the Caribbean.
The major problem is that payroll taxes are to fund a retirement benefit and not to fund the general expenses. So, the more accurate statement is that the government forces lower income people to fund for retirement at a higher portion of thier income than high income people.
We should not force them and we should let them have more control over their own retirement funds.
LOL, and if the 5-6 even ask if they could have the leftovers that 1-4 didn't even eat they are accused of wanting to starve the poor.
You don't pay SE tax ?
The high rollers would love to hear how you legally avoid SS and Medicare tax.
Under your assumption of equal shares in the proverbial pie, the 6th-10th guy should certainly get the cost reduction. Under other assumptions, not.
Your SE tax is designed to be exactly the same as your payroll tax. In fact as a self employed you pay for both the employer and employee portions.
If you have in the past gotten paid as employee and as self employed your employee W/H was probbaly enough to cover your extra SE tax. However if in a year you mostly get self-employed income and you are not setting aside another 15% your going to get a big surprise.
How is it in the federal government ? Does the rich guys limo cause similar wear and tear on the roads as my Ford Taurus ?
Does the military that protects the rich guys life also protect my life ? Are the poor getting extra benefits because they are poor ?
No, it is impossible to make such an assessment. What I'm saying is that if the government did not exist, the 10th man would have only a minor fraction of what he has with the government. People who benefit the most should pay the most.
So what you're saying is the rich have so much power, they can hurt us if we don't give them what they want?
So what you're saying is the rich have so much power freedom of choice, they can hurt us if we don't give them what they want make it financially unreasonable ?
LOL.
Those nine fools forgot to get his wallet!
Did they beat up the waiter next?
Sounds like another good argument against a national sales tax.
The poor and middle class will find it impractical to escape tax on life's necessities, like food and simple clothing, while the rich can afford overseas luxuries.
And our combined wealth as a nation would be far less so that I would be much poorer. In fact, I would be still be preparing income tax returns using a service a bureau and my clients would be paying much higher fees.
Do you not recognize that in the absense of taxes we would have a larger portion of what we have now ?
I think you are confused. Money is not power. In fact the most powerfull man ever had little more worldly belongings than a tunic.
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