[Rhodes22-list] Taxes & Politics

[General Boats]

With the same caveat that Paul posted, here is a reply from the left.  Don't
read it if it moves you to leave the list.

Would it only be so simple as the professor from SD makes it.

Just three minor complications -  many more can be contributed by musch wiser
economists..

a)   50,000,000 of us do not make enough to pay taxes no matter how hard we
work - we are just not that smart. So Tax cuts are not a neutral issue.  Tax
cuts invariably mean tax increases for us. With less revenues, services are
diminished.  Cost of education rises. (That is a very costly error - the free
GI educational bill of WW 2 got the US economy roaring).  States find
themselves in financial holes and have to make up the shortfalls with all sorts
of increases like higher sales taxes (which have the same rate no matter what
your income), higher real estate taxes - perhaps gas taxes -anything to raise
moneys the income tax cuts have taken from them. So tax cuts are a double edge
sword that not only help those who need help the least, but at the same time
hurt those who need help the most. I know some of you chafe at the idea of
someone getting something for nothing.  But those who take advantage of any
good nature the government shows are in the minority of good Americans and good
policing can wean the freeloaders out. Overkill sooner or later leads to
overthrow.   The funny thing about tax cuts is that the very wealthy think they
are a mistake.

b)   If you step back and see how the rich got rich, with the exception of
those who stole it and then bought their way in and those who contributed
nothing but happen to be born in the right circle, the majority made it the
hard way, they worked for it.  But they were only able to succeed because they
had the invaluable assistance of the police man and fireman and milkman (and in
my day the iceman) and hosts of others that were needed to create the
environment that made the accumulation of wealth possible in the first place.
Part of any money due back the high end is really to be shared with their
silent partners.  President Roosevelt understood this and pulled the country
out of a depression most of you have no inkling of.

c)   The Baltimore Sun ran an editorial pointing out that while our current
leader says we should cut taxes because it is their own money we are giving
back to them, he skips saying it is also their debt.  Yet it was and is the
very creating of the debt that paved the way for the accumulation of wealth.
But somehow when it comes to who should pay for the debt, that becomes a non
progressive burden.  We are taught that when we have money we should pay off
our debts and instead our leaders cut taxes - all the interest that could have
been saved could have paid for the next war.  What a shame.

Since no one is reading this I'll stop here.  But for the simplistic logic of
our good professor, there are many other avenues of challenge.

stan/gbi

Rik Sandberg wrote:

> Paul,
>
> Yeah, I printed that one out. Think I'll frame it and hang it on the wall
> in my office. We had that happen in Minnesota the last couple of years when
> they did a sales tax rebate. People that were living off welfare or other
> gov't programs were all bitching 'cause they didn't get any money back.
> It's amazing how they can translate paying nothing into less of a benefit
> to them than paying less is to someone else. To top it off, it seem there
> really is a fool born every minute, so there's a lot of them out there. :-)
>
> Rik
>
> At 08:00 AM 1/15/2003 -0500, you wrote:
> >Before you read this, it is a commentary on taxes & politics.  It is just
> >one guy's opinion (not even necessarily mine) so don't go crazy with this
> >& start a war.  If you don't like this kind of stuff, delete it now and
> >don't read it. - Paul
> >
> >
> >A VERY simple way to understand the tax laws. Read on -- it does
> >
> >make you think!!
> >
> >
> >
> >Let's put tax cuts in terms everyone can understand. Suppose that every
> >day,
> >
> >ten men 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 men -- the poorest -- would pay nothing; the fifth would
> >pay
> >
> >$1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth
> >$18,
> >
> >and the tenth man -- the richest -- would pay $59.
> >
> >
> >
> >That's what they decided to do. The ten men ate dinner in the restaurant
> >
> >every day and seemed quite happy with the arrangement -- until one day,
> >the
> >
> >owner threw them a curve (in tax language a tax cut).
> >
> >
> >
> >"Since you are all such good customers," he said, "I'm going to reduce
> >the
> >
> >cost of your daily meal by $20." So now dinner for the ten only cost
> >$80.00.
> >
> >
> >
> >The group still wanted to pay their bill the way we pay our taxes. So the
> >
> >first four men 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 "fair share?"
> >
> >
> >
> >The six men 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 end up being PAID to eat their meal. So 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
> >his
> >
> >earlier $59.
> >
> >
> >
> >Each of the six was 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
> >man,
> >
> >but he, (pointing to the tenth) 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, a little late what was very
> >
> >important. They were FIFTY TWO DOLLARS short of paying the bill!
> >
> >
> >
> >Imagine that!
> >
> >
> >
> >And that, boys and girls, journalists 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. Where would that leave
> >the
> >
> >rest?
> >
> >
> >
> >Unfortunately, most taxing authorities anywhere cannot seem to grasp this
> >
> >rather straight-forward logic!
> >
> >
> >
> >T. Davies
> >
> >Professor of Accounting &Chair,
> >
> >Division of Accounting and Business Law
> >
> >The University of South Dakota
> >
> >School of Business
> >
> >
> >
> >
> >
> >========================
> >Paul Grandholm
> >C&H Technology
> >GrandPower Components Div.
> >========================
> >_________________________________________________
> >Use Rhodes22-list@rhodes22.org, Help? www.rhodes22.org/list
>
> _________________________________________________
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