How the tax system works Options

[cmac]

Interesting....
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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, 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

[Testm0nkey]

"Yeah they pay a higher percentage. Just look at the tax table. Not to mention people who make millions have tons of other taxes (capital gains, big taxes on interest earned, etc). Yeah someone who made $750,000 probably won't pay all that much higher of a % than someone who made $500,000, but will definitely pay a higher % over someone who made $50,000"



- but in the end it doesnt matter. because 50,000 in taxes to a person with 750,000 doesnt mean a whole lot but a 500-1,000 to someone in poverty or who is struggling with a family means everything. its not who pays the most taxes, its how much does that tax affect their total worth. duh

and if you guys werent aware there were tax breaks for wealthy people as well. not counting any of the business ones, wealthy people are able to donate to causes, support causes and charity is a GREAT tax write off.

i didnt read anything in this thread about rich people just being trust fund babies and not working hard except for dogmeat so i dont know where that came from. whether the money was handed to them or they worked hard for it, paying a higher tax doesnt affect them as much as a poor person

He considers folks who make 70,000 "rich"

... its because they are. its the wrong of society to think otherwise. the whole gotta have this gotta have that gotta have an apartment or a house here that makes living with a 70,000 income seem like "stretching it"