Tax Cuts! Sometimes politicians exclaim; "It's just a tax cut for the rich!" and it is just accepted to be fact. But what does that really mean? Just in case you are not completely clear on this issue, I hope the following will help. Please read it carefully. Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner and 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 would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59. So, 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. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20." Dinner for the ten now cost just $80. 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 men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They 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 each 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, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33% savings). The seventh now paid $5 instead of $7 (28% savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings). The tenth now paid $49 instead of $59 (16% savings). 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. He pointed to the tenth man," but he got $10!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than me!" "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? 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 the tenth man 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 didn't have enough money between all of them for even half of the bill! And that, boys and girls, journalists and college professors, is how our 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 anymore. In fact, they might start eating overseas where the atmosphere is somewhat friendlier. David R. Kamerschen, Ph.D Professor of Economics University of Georgia
Here is another explanation: If you don't understand the Democrats' version of tax cuts (and you are not alone), maybe this will help explain it for you: 50,000 people go to a baseball game, but the game was rained out. A refund was then due. The team was about to mail refunds when the Congressional Democrats stopped them and suggested that they send out refund amounts based on the Democrat National Committee's interpretation of fairness. After all, if the refunds were made based on the price each person paid for the tickets, most of the money would go to the ticket holders of the most expensive tickets. That would be unconscionable. People in the $10 seats will get back $15, because they have less money to spend. Call it an "Earned" Income Ticket Credit." Persons "earn" it by demonstrating little ambition, few skills and poor work habits, thus keeping them at entry-level wages. People in the $25 seats will get back $25, because that's only fair. People in the $50 seats will get back $1, because they already make a lot of money and don't need a refund. If they can afford a $50 ticket, then they must not be paying enough taxes. People in the $75 luxury seats will have to pay another $50, because they have way too much to spend. The people driving (or walking) by the stadium who couldn't afford to watch the game will get $10 each, even though they didn't pay anything in, because they need the most help.
Then you're running a deficit...but of course, like everything else bad under the sun, we'll just blame it on George Bush.
Agreed Parso. More people need to read these so they have a better idea how the American tax system works.
there are only two issues that matter: 1. terrorism/war 2. economic freedom i love the goofy little story uscpuke posted. i first read it a few years ago and i think it a brilliant way to show how tax refunds work. and it is a such a politically cheap lie to make claims that tax refunds benefit the rich disproportionately. any politician that makes that claim should never be considered. but democrat demagogues, they must play the game of class conflict. i wish that at the debates, bush would go and keep explaining this over and over, and beat it into people's heads.
I like the story and it is a fair analogy. It's fairly old and the numbers have been broken down. For them to get those exact percentage savings from actual tax cuts as they do in the story, then here would be the salaries of those people per year: The first four men make $15,000 Man number five makes $18,000 Number six makes $25,000 Number 7 makes $40,000 Number 8 makes $90,000 Number 9 makes $1.2 million Number 10 makes $56 million
why should the rich ever pay a higher percentage at all? i am not positive, but i think i favor a flat tax % for everyone.
I am real positive on this. I guess the cons are that it makes too much sense, and the rich will 'only' be paying their fair share. If the rich were truly getting breaks, then liberals should support this idea.
