Best explanation to share with your congressman, and any Democrats/Republicans who might be your friends, who clearly do not understand this “complex” principle of Obama’s Tax Plan.
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 curve.
‘Since 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 pay $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 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, ladies and gentlemen, 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.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
Author Unknown
Keep this in mind next time you hear someone grousing about how the rich get all the breaks — or even more ridiculous, that the government is actually putting money into the rich’s pockets. Taking less of someone’s money isn’t giving them anything; it’s simply taking less of it. It’s still a net loss for them. Pay attention to the rhetoric used regarding taxes by the two different parties on the campaign trail. Have you noticed that the Democrats enjoy speaking in relative terms? The rich should pay more! How much more? Who knows, but more! There’s already an inordinate burden on “the rich,” so at what point will the populists stop shouting for the rich to pay more taxes? Allow me to pose a question, and we’ll suss this out in the comments:
