Non Bike: A refreshing email I just received.

[jcampbell]

TAX CUTS EXPLAINED
Because it's the election season, let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for beer 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 drank in the bar every day and seemed quite happy with the arrangement until one day the owner threw them a curved ball (or is that a curved beer!). "Because you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20. "Drinks 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 drink 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 drink his beer.

So, the bar 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 drink 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 I!"

"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 man and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers 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 drinking overseas where the atmosphere is somewhat friendlier.

David R Kamerschen, Ph.D.
Professor of Economics
University of Georgia
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.


I don't know how to fix it so I am going to Starbucks!

[Keith B]

No more coffee for the boy Campbell this morning!

[DeeZee]

Originally Posted by jcampbell

TAX CUTS EXPLAINED
[FONT=Tahoma]Because it's the [/FONT][FONT=Tahoma]election season, let's put tax cuts in terms everyone can understand.[/FONT]
[FONT=Tahoma]Suppose that every day, ten men go out for beer 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:[/FONT]
[FONT=Tahoma]The first four men (the poorest) would pay nothing.[/FONT]
[FONT=Tahoma]The fifth would pay $1.[/FONT]
[FONT=Tahoma]The sixth would pay $3.[/FONT]
[FONT=Tahoma]The seventh would pay $7.[/FONT]
[FONT=Tahoma]The eighth would pay $12.[/FONT]
[FONT=Tahoma]The ninth would pay $18.[/FONT]
[FONT=Tahoma]The tenth man (the richest) would pay $59.[/FONT]
[FONT=Tahoma]So, that's what they decided to do.[/FONT]
[FONT=Tahoma]The ten men drank in the bar every day and seemed quite happy with the arrangement until one day the owner threw them a curved ball (or is that a curved beer!). "Because you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."[/FONT]
[FONT=Tahoma]Drinks for the ten now cost just $80.[/FONT]
[FONT=Tahoma]The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink 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?'[/FONT]
[FONT=Tahoma]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 drink his beer.[/FONT]
[FONT=Tahoma]So, the bar 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:[/FONT]
[FONT=Tahoma]The fifth man, like the first four, now paid nothing (100% savings).[/FONT]
[FONT=Tahoma]The sixth now paid $2 instead of $3 (33% savings).[/FONT]
[FONT=Tahoma]The seventh now paid $5 instead of $7 (28% savings).[/FONT]
[FONT=Tahoma]The eighth now paid $9 instead of $12 (25% savings).[/FONT]
[FONT=Tahoma]The ninth now paid $14 instead of $18 (22% savings).[/FONT]
[FONT=Tahoma]The tenth now paid $49 instead of $59 (16% savings).[/FONT]
[FONT=Tahoma]Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant the men began to compare their savings.[/FONT]
[FONT=Tahoma]"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man, "but he got $10!"[/FONT]
[FONT=Tahoma]"Yeah, that's right, "exclaimed the fifth man." I only saved a dollar too. It's unfair that he got ten times more than I!"[/FONT]
[FONT=Tahoma]"That's true!!" shouted the seventh man "Why should he get $10 back when I got only two? The wealthy get all the breaks!"[/FONT]
[FONT=Tahoma]"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"[/FONT]
[FONT=Tahoma]The nine men surrounded the tenth man and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers 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![/FONT]
[FONT=Tahoma]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 drinking overseas where the atmosphere is somewhat friendlier.[/FONT]
[FONT=Tahoma]David R Kamerschen, Ph.D.[/FONT]
[FONT=Tahoma]Professor of Economics[/FONT]
[FONT=Tahoma]University [/FONT][FONT=Tahoma]of Georgia[/FONT]

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

Purple font please

[Evil Chocula]

I take it your a republican?

[el_d00der1n0]

Originally Posted by Evil Chocula

I take it your a republican?

My mom sent me that fwd a while back. It made me feel so bad for rich people.

[speckledtrout]

That whole thing is such crap. Everyone knows that rich people don't drink beer.

[jcampbell]

Originally Posted by Evil Chocula

I take it your a republican?

Not at all, I am registered NP and vote about 50/50.

EvilC, you are a finance guy. Add my bracket to my CA tax (9%) with my self employment tax and what do you get. Just a hair less than 50%. Ouch!

Now if the government lowers my tax by say 5%, I could have went out this year and bought some new office equipment, and done more advertising, and whatever else I thought of. Might have even been able to go buy a new car this year. What did that do for the economy, it spurs growth. Someone has to make all the stuff I bought. Regardless if it was made here or not, there is a company that American's work for that would have made money.

Now if they drop my rate by say 10%, I could have hired a new employee which would have been ideal. That would have spurred jobs in America. It doesn't make me any more richer (I am not rich now), it actually spreads wealth from my company to the employee's family.

Now take the flipside, they let the tax cuts expire and my taxes increase. I won't be buying any machines or any advertising services, and won't be buying a new car. Doesn't sound good for the economy. Also don't forget that I won't be able to afford to hire anyone, bad for jobs growth and individuals looking for work.

In fact what I'll be doing is buying property, renting it out for cash, in turn I get a write off to lower my taxes and get cash. And with that scenario, I'll be getting richer. In this scenario, the "Rich get Richer." Don't be fooled. This is where the 10th guy just doesn't show up and share with his friends.

Remember, anyone who makes over 65k is considered rich. If the tax bracket is low, more people will claim more income, so the government makes more money. If the tax bracket is high, people will do everything in their power to lower their taxable income so in fact, they government will get less.

This has nothing to do with being a republican or democrat, its a fact that most people will benefit from a booming economy. Booming economy's have more jobs, and more wealth to spread around.

Seriously, I am going to Starbucks now.

[Evil Chocula]

Originally Posted by jcampbell

Not at all, I am registered NP and vote about 50/50.

EvilC, you are a finance guy. Add my bracket to my CA tax (9%) with my self employment tax and what do you get. Just a hair less than 50%. Ouch!

Now if the government lowers my tax by say 5%, I could have went out this year and bought some new office equipment, and done more advertising, and whatever else I thought of. Might have even been able to go buy a new car this year. What did that do for the economy, it spurs growth. Someone has to make all the stuff I bought. Regardless if it was made here or not, there is a company that American's work for that would have made money.

Now if they drop my rate by say 10%, I could have hired a new employee which would have been ideal. That would have spurred jobs in America. It doesn't make me any more richer (I am not rich now), it actually spreads wealth from my company to the employee's family.

Now take the flipside, they let the tax cuts expire and my taxes increase. I won't be buying any machines or any advertising services, and won't be buying a new car. Doesn't sound good for the economy. Also don't forget that I won't be able to afford to hire anyone, bad for jobs growth and individuals looking for work.

In fact what I'll be doing is buying property to get a write off to lower my taxes so that I can live. And with that scenario, I'll be getting richer. In this scenario, the "Rich get Richer." Don't be fooled. This is where the 10th guy just doesn't show up and share with his friends.

Remember, anyone who makes over 65k is considered rich. If the tax bracket is low, more people will claim more income, so the government makes more money. If the tax bracket is high, people will do everything in their power to lower their taxable income so in fact, they government will get less.

This has nothing to do with being a republican or democrat, its a fact that most people will benefit from a booming economy. Booming economy's have more jobs, and more wealth to spread around.

Seriously, I am going to Starbucks now.

That's true... but, your 1099'ed by your firm right? If so, you can right off most the expenses you'd mentioned and lower your bracket..

.... which would in turn reinforce your point! So you're right.

[EMrider]

This is why discussion about "tax cuts for the rich" is so absurd. It is only possible to cut taxes for people who already pay them.

[ghixon]

I always giggle when I hear that the poor are being exploited.

I have a friend who's sister is a single mom with three kids (all by different father's-different story) and a low paying job. At the end of the year, she gets more back in tax refunds than she pays in taxes per year. Go figure that one out if you can.

[el_d00der1n0]

I don't know why bubbs insist on getting political discussion started here.

[granny ring]

Because this is the Pub. And it really wasn't a political topic it was economics 101.

[Reedster]

Originally Posted by jcampbell

Remember, anyone who makes over 65k is considered rich.

Woohoo! I'm rich.

Too bad I don't feel that way. I can't imagine that 65K is really that much here in SoCal. At least I have sun and good weather this time of year.

~R

[project_d]

Originally Posted by Reedster

Woohoo! I'm rich.

Too bad I don't feel that way. I can't imagine that 65K is really that much here in SoCal. At least I have sun and good weather this time of year.

~R

AMEN!!!

[FatWhat?]

I've heard a rumor that this is a credit that will also affect next years returns. ie. this is a loan for next year, the government just aren't going to word it that way in hopes to stimulate the economy.
Like I said it was a rumor I heard, and I unfortunately have nothing to back it up. I guess just be cautious if $600 next year would be a stretch to pay in addition to your normal rate.
I post this in hopes someone on here is more savvy than myself in these matters and can provide some info.

By the beer should be free anyway

[bighit8]

my head hurts now, thanks!!!!