Full Version: Simple Explanation of the Tax System
How Taxes Work . . .
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 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 who pointed 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 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 straightforward logic!
The author of this is unknown.
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 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 who pointed 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 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 straightforward logic!
The author of this is unknown.
But what happens when what the ten people put in doesn't cover the bill? Is the restaurant owner really likely to suggest further reducing the bill?
But where is the 10th man going to eat?
I suggest a very easy system to compute taxes:
Line One: How much do you make?
Line Two: Send it in.
(sorry, couldn't resist
)
..................................................
What do the 'rich' do with the money they will save in taxes?
Hide it under the bed? probably not
Bury it in the backyard? probably not
Invest it which might create jobs? - could be a 'yes' here
Spend it on high tickets items that are built by low ticket people? - could be a 'yes' here too
And remember every time that rich person does something with his/her money - like invest or spend - it gets taxed. So the government does get some of it right back.
Line One: How much do you make?
Line Two: Send it in.
(sorry, couldn't resist
)..................................................
What do the 'rich' do with the money they will save in taxes?
Hide it under the bed? probably not
Bury it in the backyard? probably not
Invest it which might create jobs? - could be a 'yes' here
Spend it on high tickets items that are built by low ticket people? - could be a 'yes' here too
And remember every time that rich person does something with his/her money - like invest or spend - it gets taxed. So the government does get some of it right back.
Unfortunately, it is not real conservative to cut taxes while raising spending at the fastest rate of any administration since LBJ.
Actually, the tenth man should've been paying far more than $59 at the outset. But, since he eats lunch every day in the Cayman Islands, the other nine were duped into thinking it was a fair deal. 
QUOTE(Wertz @ Jan 18 2003, 08:20 PM)
Actually, the tenth man should've been paying far more than $59 at the outset. But, since he eats lunch every day in the Cayman Islands, the other nine were duped into thinking it was a fair deal.
They are all eating in the same place at the same time.
Typical to make a curt statement and totaly dodge the real issue at hand.
Sleeper
So this restaurant owner actually charges $125 per 10-person meal, and there's a $25 deficit each day. To get the money owed, the owner issues restaurant ® bonds and bills that the rich guy buys. Part of the $100 paid for the meals comes back to the rich guy as interest on the bonds and bills. The rich guy can also speculate on R-bonds/bills in the futures market, which he and a bunch of his golf buddies regularly manipulate. Otherwise, he can create trust funds to protect principal and interest from taxation.
In the end, the rich guy's meals are free and he, along with his golf buddies and foreign investors, owns the restaurant.
Brrrrrr, is it cold in here?
In the end, the rich guy's meals are free and he, along with his golf buddies and foreign investors, owns the restaurant.
Brrrrrr, is it cold in here?
This is a simplified version of our main content. To view the full version with more information, formatting and images, please click here.