[Rhodes22-list] Taxes & Politics

[Robert Quinn]

>
> Subject: Understanding our Tax System
>
> This is 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 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.  "But 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, a little late what was very
> important.  They were FIFTH-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 straightforward logic!
>
> T. Davies, Professor of Accounting & [Over-Stuffed]Chair,
> Division of Accounting and Business Law
> The university of South Dakota School of Business